Date: February 24, 2022
If You have Remote Employees, Avoid This Complicated Tax Mess
Remote work has been on an upward trend for a while now. One of the changes COVID brought was a major shift in demand for remote employees. But what many business owners didn’t realize was that there are major tax implications, when employing in other states. Many employers have hired remote employees in different states and are just now starting to feel the effects of the tax implications. If you have employees working in other states from where your company is based, it’s just a matter of time before those states start sending you love letters asking for the money that is owed to them.
The tax code is purposely complicated and confusing, and the state codes are certainly no exception. States have different approaches to taxation and determining physical presence for tax purposes, and many business owners (and accountants) are not aware of the differences and how those differences will help or hinder the business. We provide solutions to help our business owner clients to not only ensure they are compliant when it comes to the state tax liabilities like withholding and unemployment, but to streamline and automate the process to save them time and money. Once you get on a state’s ‘shit list’, they make it painful to get off of it, assessing penalties, fines, and late filing fees. If you are an independent contractor or freelancer contracted employee (generally meaning you receive a 1099 form instead of a W2), then you must file a tax return for each state you received revenue from.
Since it looks like the remote employee trend will continue as it has the last couple of years, we hope you’ll be proactive in finding a solution before it becomes a problem. Do you have someone in your corner to help navigate the confusing federal and state tax? The deadline to file your 2021 taxes is rapidly approaching. We are happy to help make sure your 2021 returns are filed correctly, and on time so you don’t have to worry. Click here to speak with one of our tax experts.