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I work from home in Texas for a consulting firm but my projects are located in multiple states. I have two scenario questions.

Scenario 1: I never travel outside of TX for work. Do I need to pay state income tax on wages earned if the projects are located outside of TX but I do all of my work in TX working from home?

Scenario 2: If I travel occasionally for work, doing some work in other states and some in Texas. Do I pay state income tax on wages earned while in the state but not for the times I'm in Texas?

Thanks for any help or guidance

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    You say you work "for a consulting firm". Is the consulting firm a Texas company? Who (directly) pays you - the consulting firm, or the clients who have the projects?
    – Istanari
    Sep 18, 2020 at 21:09
  • It seems like this is something your employer would probably handle. Is there any reason for you to think they won't? I also work for a consulting firm with projects in many areas, often even in other countries, and I do sometimes travel for work. I've never had taxes withheld from anywhere except my home state or been given any documents saying I worked elsewhere..
    – Kat
    Sep 19, 2020 at 15:23

1 Answer 1

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Scenario 2 is simple, but complex.

How each state treats people who occasionally travel to their state to perform work. Some will want to collect taxes on every dollar, others only after a certain number of hours/days. Others don't care because they have reciprocity. You will have to look at the tax site for each state to see their thresholds and rules.

Scenario 1 would normally be easy to understand. If you are in Texas and your employer is in Texas, and you never leave Texas. Then the other states won't expect you to pay them any income taxes.

It is more complex if the employer is in another state and you are in Texas. Then it depends on why you are in Texas. If is it for your benefit, then the other state may want to tax you. If it is for the employers benefit, then the other state probably won't tax you. If the company is in state X and you manage their Dallas office then it is for the employers benefit. If you are in Texas because you hate driving that far, it is for your benefit.

COVID-19 has made this even more murky, because working from home is for everybody's benefit.

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