Killeen, TX asked in Tax Law for Texas

Q: Remote worker outside of state

If I work for a texas company and my residence is still texas. But I work remotely, if I take my laptop and go work, let's say, in South Carolina for 2 weeks. Does that mess up taxes for the company? They are telling me that it does. But that doesnt make sense to me. I'm not moving. I'm not filing taxes in that state.

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2 Lawyer Answers
John Michael Frick
John Michael Frick
  • Frisco, TX
  • Licensed in Texas

A: You may be legally required to file a nonresident state income tax return in South Carolina. Texas, of course, has no state income tax. Most other US states, however, do. Each state has the power adopt its own laws in this regard. As a result, those laws differ from state to state. If you perform work remotely for your employer in a state that does have a state income tax, you may be legally required to pay income tax to that state for income earned during that period of time. And your employer may be legally obligated to withhold taxes from your paycheck to remit to that state. Most, if not all, states allow non-resident workers to temporarily perform services for out-of-state employers within the state without being subject to its income tax laws. But the laws vary from state to state.

See the attached article for a more detailed discussion:

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Tax Law Lawyer
  • Sacramento, CA

A: This is an interesting tax law question. To provide a concise answer:

Generally, working remotely for 2 weeks in another state should not significantly impact your or your company's taxes, especially if you maintain your Texas residency. However, there are some nuances to consider:

1. Short-term travel: Most states have thresholds (often around 30 days) before they require income tax withholding for non-resident workers.

2. Nexus concerns: Your company may be worried about creating a business presence ("nexus") in South Carolina, which could potentially subject them to that state's business taxes.

3. Company policies: Some employers have strict policies about out-of-state work due to complex compliance issues across multiple jurisdictions.

4. Specific state laws: Both Texas and South Carolina laws could have particular rules that apply to this situation.

While a 2-week trip is unlikely to cause major tax issues, your company's caution is understandable given the complex nature of multi-state taxation.

I'd recommend:

1. Discussing your specific situation with your company's HR or legal department.

2. Consulting a tax professional familiar with multi-state taxation for personalized advice.

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