Remote Employees: Why Their Work Location Matters
Remote employees taking hush trips or workcations has been the topic of recent online articles. While the focus of the article is on what looks to be the newest travel trend for 2023, what piqued our interest was how a trip taken by a remote employee, without consent from their employer, could create tax implications for both the employer and employee.
Changing Work Locations and Tax Implications for Remote Employees
The COVID-19 pandemic dramatically changed people’s thoughts about when and where work can be performed. With many employees now working from home, companies have had to spend considerable time making sure employees tax withholdings are appropriate for their work location. Now, employees are starting to take workcations where they perform their work from a remote cabin or a beach resort. While the remote employee may believe their work location doesn’t matter as long as their work is completed, depending on the state and certain municipalities or cities, as well as how much time was spent working in the new location, your employee may face an additional tax burden.
WM WISDOM:
Make certain your company has rules in place regarding remote employees notifying you in advance of changes to their remote work location.
Employer Tax Implications
Generally, a company is deemed to be doing business in and possibly subject to a state’s tax laws if the company has employees in that state. Historically, a company’s office locations were where the majority of employees worked and where company’s had state tax nexus. Today employers need to determine the impact their remote workers have on where they are deemed to be doing business. Whether an employee is working from their home or working while on a workcation they could be creating nexus and possibly unknowingly creating an additional tax filing requirement for their employer.
Our team is seeing increased state nexus and tax compliance issues concerning remote work locations. All employers should take steps to create policies and guidelines for their employees so that they are aware of work locations and have the ability to determine the impact on their business.
Questions?
Should you have questions about this topic, or any other topics related to your personal or business situation, please contact us at any time.
DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update COVID-19, COVID-19 Business Resources, COVID-19 Client News Alerts and other related communications are intended to provide general information, including information regarding legislative COVID-19 relief measures, as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.
