The pandemic has forced people to things they never thought they would have to do, like moving their office into their home.
But now, people are finding out they could be taxed for working remotely.
“What a state allows versus what a city allows versus what the federal allows can be very different for taxes,” said Tom Jane, with Saginaw Valley Business Service.
Jane said that’s what taxpayers who worked remotely will have to keep in mind this year, especially if their job is in a different state.
“Sometimes, the credit or the taxes associated with the state may be higher,” Jane said. “Michigan is 4.25 percent, California is 11 percent. So if you’re working for a state, you might be paying a higher tax rate than what you’re used to.”
It’s something that could leave many remote workers with a tax surprise. The situation stems from workers failing to update their tax withholding to reflect their new location.
Jane said there are things you can do if you fall into that category.
“Workers should document where they’re working out of, what they’re doing in the time period of what’s going on,” Jane said.
He also suggests contacting your human resources department, so you won’t be subject to those state taxes.
“Possibly getting a letter from your employer for documentation and your proof to say, ‘I’m physically working from this location’ and putting that information on your tax return,” Jane said.
Jane said this isn’t a situation you want to tackle yourself, but instead should get a professional to help.
“Call and get in touch with your preparer or CPA, ask that information, ‘how may this affect me?’ ‘Will this affect me,’” Jane said.
According to a study by the American Institute of CPAs, more than half of adults who worked remotely could face tax consequences.