What Remote Workers Need To Know For Tax Season

To best manage credits and incentives related to a remote workforce, employers can partner with Experian Employer Services tax experts who track these local programs to give a better picture of the best path forward. Some states have seen economic benefits from remote employees and are
actively recruiting more. Adding solid wage earners and their families to their
community is a win-win. Typically, these people buy houses and spend money at
local businesses, but don’t stress the local infrastructure or school districts
in the way a new business facility may. States including Vermont, Indiana and Hawaii
are offering financial inducements to recruit remote workers to their area.

You don’t need to worry about calculating this when using the simplified method for taking the home office tax deduction. Self-employed business owners can deduct up to $1,080,000 (for tax year 2022) for qualified business equipment like computers, printers, and office furniture. The amount you can deduct is still limited https://remotemode.net/blog/how-remote-work-can-benefit-employees-and-companies/ to the amount of income from business activity. You can also deduct supplies that you buy like paper, printer ink, or supplies for your customers, and you can take the home office deduction. Having looked at the key advantages of remote work for employers, let’s now discover the benefits employees can enjoy.

Remote Contractors Pay Their Own Tax

Employees who are happy and satisfied with their jobs are also less likely to take time off sick. An analysis of employee data conducted by the Fiduciary Group in 2020 confirmed this. Many remote jobs enable you to start and terminate your work shift at any time you wish, as long as your assignment is completed. And Felicia, the administrator who left a six-figure job because of her company’s back-to-office push, said flexibility makes up for lower pay.

In addition, there may be significant, long-term cost savings for a company if many of its employees work remotely. A recent Harris Poll showed that many people are “not very” familiar with the tax laws in their state of residency or the state where their employer is located. Taking time to read up on the tax implications of remote work will help to stave off frustrating hiccups down the road. Thirty-two states have graduated income taxes similar to the federal income tax. Ten states have a flat income tax, and nine states have no income tax at all. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities.

Key Benefits of Remote Work for Employers and Employees

Even if you prefer using software and preparing your taxes yourself, CPA and Tax Strategist Chika Obih recommends hiring a tax professional for at least the first year you work in a state different from where you live. The same holds true if you live in different states throughout the year. That way you’ll at least have a basic understanding of your tax situation that you can follow in the future. Most states offer a tax credit that offsets your liability if you’re not a resident there.

In some cases, an employee does not have a regular workplace and is treated as itinerant for tax home purposes. Let an expert do your taxes for you, start to finish with TurboTax Live Full Service. Or you can get your taxes done right, with experts by your side with TurboTax Live Assisted.

Cost Savings associated with Remote Payroll Solutions

With this approach, the responsibility for any potential tax liability is firmly placed upon remote workers. It’s worth remembering that while hiring remotely maybe new for a business, tele-commuting can also be new for an employee. It’s advisable to keep your options open until making the hire, as every employer and employee has their own preference. This article on payroll and tax for remote workers outlines your options. The starting point is the same, whether you are a remote job seeker or recruiter, wherever you are in the world.