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I'm domiciled in California, my employer's headquarters are based on California, my work office is in California and I typically work from California. If I go outside California and work from US State y for x days, am I supposed to pay state taxes in state y? Supposed that I'm either a US citizen or a US lawful permanent resident.

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  • Are you working on-site in that other state, or working remotely at your California office? (If the latter, how would anyone know where you are?)
    – jamesqf
    Aug 21, 2020 at 16:22
  • @jamesqf I'll be working remotely at your California office. Just curious to know in theory, but in practice it someone wanted to enforce whichever rule may apply they could look at flight tickets (not 100% perfect but decent approximation). Aug 21, 2020 at 16:31
  • It is notable that California itself is particularly enthusiastic (I would even say rapacious) in collecting income tax on non-residents who work in California for only a few days a year. Mostly professional sports players who pay the pro-rated amount of their season salary for each game played in California - but also some wealthy businessmen.
    – davidbak
    Aug 22, 2020 at 1:35
  • @Franck Dernoncourt: From experience, working remotely out of the California office meant I got to pay California non-resident income tax, even though I reside in a state with no income tax, and did about half my work from there. WRT checking tickets, I either drove or flew myself.
    – jamesqf
    Aug 22, 2020 at 4:31

2 Answers 2

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There are two answers to this question:

  • Before COVID19. Each state sets their rules. There is no standard answer. If you make a ton of money, like a professional athlete, X days can be as low as one for some states. For people with normal rates of pay X can be almost anything. If there is reciprocity between the states you could work everyday in state Y and not impact your taxes, in other cases it could be a matter of a few weeks in the other state.

  • During COVID19. States are realizing this is a problem. Some people are stuck in quarantine. Others are working from home because the office has been shutdown for non-essential people. They may decide to not care this year. Working from home was only supposed to be for a matter of weeks, not months.

I have worked for a company in the past that required us to include the zip code where the work was done that day. If you traveled multiple times to some states, the company withheld taxes for that state and required you to file a state tax form to get it back. It was a nightmare of paperwork for some employees.

Either you employer tracks this, or you are expected to know the rules when you work in multiple states, and are expected to file the appropriate tax forms each year.

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    That's amazing. I had no idea that, in theory anyway, you're supposed to pay in each state!
    – Fattie
    Aug 21, 2020 at 17:07
  • "I have worked for a company in the past that required us to include the zip code where the work was done that day." Very interesting, I wonder why this employer chose that. Maybe some bad experience during a former tax audit? Aug 21, 2020 at 18:02
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    Source for "may decide to not care this year"? NY is (or at least, was) taxing the health care workers that came to help during the height of the cases there. States are broke - I doubt they'll forgo any money they can get their hands on...
    – Joe
    Aug 22, 2020 at 6:44
  • Yes, I find the comment about states deciding not to care strange. In fact since the rules and procedures and data collection system are already in place, it would probably be more work for the states to change the system than to stick to it. So, even if they decide to do it differently (and as @Joe said everybody needs money right now) it is unlikely that it would be because "they do not care"; it will take active measures which is the opposite of not caring.
    – SJuan76
    Aug 22, 2020 at 7:40
  • Regarding at least one state deciding that they don't want to get involved: state.nj.us/treasury/taxation/covid19-payroll.shtml. "New Jersey sourcing rules dictate that income is sourced based on where the service or employment is performed based on a day’s method of allocation. However, during the temporary period of COVID-19 pandemic, wage income will continue to be sourced as determined by the employer in accordance with the employer’s jurisdiction. " Elsewhere on that same page they say they aren't going to require employers to change the employees work location during covid19. Aug 22, 2020 at 10:54
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Generally, if you are a resident of a state, you are subject to that state's income tax on your worldwide income; whereas if you are a nonresident of a state, you are subject to that state's income only on your income with a source in that state.

So the first question is whether you became a resident (even for part of a year) of the other state during this time. If you did, then you would definitely be subject to that state's tax on all your income during that period. The definition of tax residence varies by state, but I am assuming that since it's a temporary move, you don't become a resident of the state.

The the second question is whether the work income is sourced from that state during the time you're there. Work income is generally sourced in the place where the work is performed. This is a tricky question for remote work, since, in a certain sense, you are performing your work in the other state. This article lists 13 states that have allowed employees temporarily telecommuting to pay tax to the state where the employer is located, but the rules are unclear for other states. The Republican stimulus bill S. 4318, section 403, sections (a)(1)(B) and (a)(6), provide that you have to be present in a state for more than 30 days (or 90 days during 2020) to be subject to that state's tax, but this has not been passed.

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