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I live in Pennsylvania. I work full time 100% remotely for a company that is located in Connecticut. On my first paycheck I was surprised to find that I was having state income tax withheld by both CT and PA. Something doesn't seem right about this, so I wanted to ask if this situation is correct. Will I really be getting double taxed just for working remotely? Will I get a refund when I file taxes next year?

  • Each state has its own rules about what is taxable, and they don't necessarily match or respect each other. So you could end up paying both state taxes. I don't know specifically for PA and CT. – Aganju Mar 13 '20 at 12:47
  • Did you work any days in the corporate office? Did you submit any state level W-4 forms? – mhoran_psprep Mar 13 '20 at 13:19
  • @mhoran_psprep I spent my very first week with the company in CT for onboarding purposes. I may never go there again as far as I know. I filled out CT W-4. – Milton McDonald Mar 13 '20 at 13:39
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Did some googling, and this appears to be a unique difficulty of Connecticut that's hosing you. Typically, you would only be charged in the State where the work was actually performed-- IE, Pennsylvania, since that's where you were physically typing.

Unfortunately, Connecticut Law as of 01/01/2019 states:

Connecticut teleworker implications

Effective January 1, 2019, nonresident Connecticut income tax is imposed on all wages paid to employees working outside of state if (1) the state from which they perform those services is within Delaware, Nebraska, New York or Pennsylvania and (2) the work is performed outside of Connecticut for other than a bona fide reason of the employer.

My interpretation of this (which you should absolutely check with a lawyer about if you want to take action) is as follows:

If your employer did not give you the opportunity to work in Connecticut, you should not be paying taxes. Potential pitfall-- "given the opportunity to work in Connecticut" could mean a lot of different things. If they had an office and said, "would you be willing to relocate?" and you said "no," that might still count as giving you the opportunity to relocate. If they have an office that is a 3 hour drive from your home, they might claim that this is a reasonable distance to commute, etc.

If your employer did or does have an office in Connecticut close enough that you are able and willing to commute into it, you can avoid paying Pennsylvania income taxes by commuting to Connecticut. You would still pay Pennsylvania resident taxes.

Disclaimer: I'm not a lawyer, and all of this has been gleaned from a quick Google search or two. I am a fallible human, and there's every chance that I am interpreting this information incorrectly.

  • What kind of a lawyer do you recommend that I speak with? Are there tax lawyers and such that could answer this question for me? – Milton McDonald Mar 13 '20 at 14:05
  • There are tax lawyers, and they would most likely serve you best. Just google "PA Tax Lawyer" and you should get a few options that you can call up. You can probably get a free consultation. Keep in mind that you will likely pay some fee if you wish to take this to court. Probably wise to guesstimate that fee before going to court. If you stand to lose, say, $1000 in taxes, but to pay $5000 in legal fees, and you'll only stay in the job for a year, it's probably not worth hiring a lawyer. (Numbers are made up and based on nothing but easy math) – NegativeFriction Mar 13 '20 at 14:15
  • @NegativeFriction I read it a bit differently. I read it that you are subject to the tax unless the company needs you to work outside of Connecticut for a legitimate business reason. – Eric Mar 13 '20 at 15:57
  • @Eric I think your interpretation is correct, but is not the matter I was referencing. Typically, if your company requires you to work in another State, then the company should be establishing their own branch in that State and paying the relevant taxes. – NegativeFriction Mar 13 '20 at 16:04
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    You might want to talk to the company's payroll department before spending money on a lawyer. After all, it is not the state that is withholding the money, it's the company. It could be something as simple as a mistake or misunderstanding on their part. – jamesqf Mar 13 '20 at 17:07

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