Planning to split time between places changes how you report income. As more employees choose hybrid or fully remote setups, payroll and withholding can get complicated. You’ll need clear steps to avoid penalties and double taxation.

This short guide shows what matters most. You’ll learn how your residence, your employer’s location, and the days you spend in different states interact to decide where you file. Some states use a convenience-of-the-employer test that can trigger unexpected obligations.

We’ll cover federal basics and common state scenarios, plus local city or county levies that still apply even if you don’t commute. You’ll also see practical tips for temporary moves, hybrid patterns, and brief overseas stays.

By the end, you’ll have a step-by-step checklist and plain-English examples so you can apply the guidance to your situation with confidence.

Start here: What remote work means for your taxes in the United States right now

Start with one clear rule: your resident state can tax all the income you earn, while other states can tax pay tied to the days you are physically performing duties there.

As of August 2024, about 12% of full‑time employees are fully remote and 27% are hybrid. If you are a remote worker who never visits your employer’s state, you may owe no state income taxes to that state.

But hybrid patterns change the math. Occasional trips to an office can trigger multi‑state filings. When you work in multiple states, your home state usually offers a credit for taxes paid elsewhere to reduce double taxation.

• Anchor to the core rule: residency taxes broadly; other states tax income tied to physical presence.
• Note the impact of federal laws: W‑2 employees lost unreimbursed employee expense deductions, so don’t count on that deduction.
• Map your days, locations, and employer ties to identify obligations and plan filings.

Bottom line: the practical test is location and time. Track both, so you can report accurately and avoid surprises.

How to determine where you owe state income tax when you work remotely

Start by confirming your state of residence. Your domicile usually determines where you owe state income for the year. Identify where you live most of the year, where you vote, and where you hold a driver’s license.

Your employer’s location still matters. Even if you are physically in one place, payroll withholding or a company office in another state can create filing needs for employees. Check your paystubs and withholding forms to see which state was used.

Your state of residence and primary work location

Most residents pay income tax to their home state on all wages. If your residence has no wage tax, the calculation changes.

Your employer’s location and how it can still matter

An employer’s state can require withholding or filings if it has nexus. That can create nonresident returns for you, even when you rarely visit.

Time spent in another state and residency thresholds

Brief trips can trigger nonresident filings. Extended stays—often over 183 days—may create residency and broader tax exposure. Keep a calendar and log hours to prove presence.

• Document domicile and primary place of duties for withholding.
• Track days in each state to avoid surprises.
• Expect resident credits for taxes paid to another state, but compare rates.

Situation	Who usually taxes	Key test	Example
Live and perform duties in same state	Resident state	Domicile and physical presence	Utah resident working in Utah
Live in no-income-tax state, employer elsewhere	State where you are present	Physical presence and employer payroll	Texas resident never present in Louisiana
Split time across states	Resident + nonresident states	Day counts and source rules	Oregon withhold for out-of-state employer
Long stay >183 days	New resident state may tax all income	Residency threshold	Move midyear and become resident

Remote work tax rules: the fundamentals you need to apply

Keep two buckets in mind: federal payroll obligations are uniform, while state and local withholding change with your location and employer setup.

State income taxes versus federal taxes for remote workers

Federal payroll basics don’t vary by state. Employers must withhold federal income tax, Social Security, Medicare, and FUTA for employees. That stays the same whether you live in one state or several.

As a W-2 employee, you generally cannot claim a home office or unreimbursed expense deduction under current law. Independent contractors, by contrast, can take more business deductions and handle estimated and self-employment taxes themselves.

Local taxes and city/county rules that may affect your paycheck

City and county levies can change your net pay. Some municipalities charge payroll or local income taxes that require separate withholding.

• Confirm employer setup: ensure payroll uses your current address and local withholding profile.
• Update HR quickly: moves can trigger new state withholding and unemployment insurance rules.
• Watch multi-state teams: employers often register and withhold where employees live or perform duties.

“Separate your federal and state obligations early to avoid surprises at filing time.”

Working in or with states that have no wage-based income tax

If you live in a state with no wage tax, your filing picture changes but doesn’t disappear. Several states—Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming—do not tax wages. New Hampshire and Tennessee historically taxed only interest and dividends and are phasing those out by 2025.

Practical point: if you’re a Texas resident and perform all duties from Texas for a Louisiana employer that has no presence in Texas, Louisiana generally cannot tax that income.

Payroll programs and taxable benefits

Washington, for example, does not tax wages but requires payroll programs such as paid family and medical leave, long-term care, and paid sick leave. Employers must register, withhold, or contribute as required.

Remember that taxable benefits count as wages on Form W-2. Multi-state employment can change how benefits are reported and which state claims them.

• Check local levies and payroll programs even when your state has no wage tax.
• Track physical presence: occasional days in another state can trigger nonresident filings.
• Employers should register where employees live or work to meet payroll and employment obligations.

“No wage tax doesn’t mean no paperwork — verify withholding and benefit reporting to avoid surprises.”

The convenience-of-the-employer rule and when another state can tax you

The convenience-of-the-employer concept can change where you owe taxes. A few states treat pay as sourced to the employer’s jurisdiction if you choose to be away from that office for your own convenience.

Which states apply it and what matters: Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New Jersey, New York, and Pennsylvania use versions of this test. Connecticut may respond when a resident state has a similar law, and New Jersey can raise it during audits.

Required versus voluntary arrangements

If your setup is required by the employer — for example, no office space or a formal mandate — the employer’s state usually cannot reassign your income. If you choose to be offsite for personal convenience, the employer’s state may assert taxing rights.

Real-world examples and practical steps

Consider New York: a nonresident with a NY employer may owe NY taxes unless you can show the employer required your arrangement. An Arkansas office could tax a Georgia-based employee who opts to be remote.

• Document employer policies and written mandates.
• Collect workspace denials, email directives, and HR memos.
• Learn more about the convenience-of-the-employer rule to assess obligations.

“Keep clear records showing why your location is necessary for the employer, not just convenient for you.”

Using reciprocity agreements to avoid double taxation

Reciprocity pacts let many commuters file only with their home state instead of multiple jurisdictions.

These agreements simplify withholding and reduce paperwork for cross-border employees. If your resident state has a pact with the state where you earn wages, you usually pay income taxes only to your home state.

To qualify, you must live in a reciprocity state and perform duties in a paired state. Typically you provide a nonresident withholding exemption form to the employer in the other state. That stops out-of-state withholding.

• Check whether your state is in a reciprocity network; about 15 states plus DC participate.
• Keep exemption certificates and paystubs to prove correct withholding.
• Remember: reciprocity may not cover incidental days in another state; those days can trigger nonresident filings.

“When reciprocity applies, you generally avoid filing nonresident returns for those wages.”

Scenario	Who files	Action
Maryland resident earning in DC	Maryland	Submit Maryland exemption form to employer
Ohio resident earning in Pennsylvania	Ohio	Provide PA nonresident exemption; file OH return
Michigan resident earning in Indiana	Michigan	Give IN withholding form; keep records

Temporary moves, hybrid schedules, and multi-state work patterns

When you split your time across states, tracking days becomes the core of tax compliance. Short stints or blended schedules can change where you file and what you owe.

Short stints, day-count rules, and nonresident filings

If you temporarily live or work in another state, even a few days can create a nonresident filing requirement. Each state sets its own day-count threshold. Some use 183 days; others have different formulas.

Track your presence daily. A precise log helps you allocate income and avoid surprises. Keep travel calendars, location notes, and expense receipts to support filings.

When you become a resident midyear and how credits usually work

If you change residence midyear, you will typically file part-year returns in both states. Allocate wages by the period you lived in each state.

Resident credits often offset taxes paid to other states. But credits vary by jurisdiction, so compare rate differences and keep documentation.

“Document days and address changes early so withholding matches your filing needs.”

Scenario	Who files	Typical action
Short stint in another state	Nonresident	File nonresident return; apportion income by days
Hybrid schedule across two states	Resident + nonresident	File resident return, claim credit for taxes paid to other state
Move midyear	Part-year resident in both	Allocate income by residency period; adjust withholding

• Expect employers to update withholding when you change address; confirm changes with HR.
• Rules and requirements differ by state — check each state’s guidance before filing.
• Use clear logs to show how much time you spent in each jurisdiction.

Working remotely from another country: U.S. rules and foreign obligations

If you base yourself abroad, you can owe filings both to the U.S. and to the country where you live.

Residency tests matter. Many countries use a 183-day threshold, though some apply shorter tests. The U.S. treats citizens as taxable on worldwide income, so you must file even when you also pay foreign taxes.

Foreign Earned Income Exclusion and qualifying tests

The FEIE for 2024 is $126,500. To claim it you must meet either the bona fide residence test (an uninterrupted full tax year abroad) or the physical presence test (330 full days in any 12-month period). You also need a foreign tax home.

Abode, ties, and the Leuenberger lesson

Your “abode” is where your strongest ties are. If you keep U.S. property, accounts, and family nearby, a court may find your abode remains stateside and deny the FEIE.

Employees, contractors, and Employer of Record

Contractors usually pay local taxes where they live. If you’re an employee abroad, an Employer of Record can handle payroll, benefits, and compliance for foreign employment obligations.

“Keep precise day logs, visa records, and proof of foreign housing to support FEIE or treaty claims.”

Issue	U.S. effect	Foreign effect
183+ days	File U.S. return; consider FEIE or credit	May trigger local residency and filings
330-day test	Qualifies for FEIE physical presence test	Supports exclusion against foreign withholding
Strong U.S. ties	May disqualify FEIE (abode)	Local residency still possible

Employer how-to: withhold, register, and stay compliant across states

Employers must plan registration and withholding as a first step when staff live or perform duties across multiple states. Register with each state’s tax agency, set up state withholding, and open SUTA accounts where your employees are located.

Set up correct withholding, SUTA, and quarterly filings

Align federal filings (for example, quarterly Form 941) with state returns and unemployment reports. Make sure wage reports reflect the correct state so unemployment and payroll taxes post properly.

Watch sales tax nexus and payroll programs

Having an employee in a state can create sales tax nexus for your business. That may force you to register, collect, and remit sales tax and obtain a permit.

Note: some states require payroll programs like PFML or long‑term care; configure payroll systems to handle those local requirements.

Document locations, track days, and standardize address workflows

Capture each employee’s location, day counts, and hybrid patterns in a centralized system. Standardize change‑of‑address steps so withholding, benefits, and unemployment filings update immediately.

• Train HR and payroll on reciprocity forms, convenience‑rule risks, and nonresident withholding.
• Coordinate with legal and finance before hiring in a new state to assess doing‑business thresholds.
• remote work taxation guide can help you build compliant processes.

“Register everywhere your staff live and keep day logs to reduce penalties and protect employees.”

Conclusion

This guide pulls together practical steps so you can file correctly and avoid paying twice when your job spans states or countries. Use the checklist to apply core rules with confidence and limit filing mistakes.

Before you go or change addresses, confirm reciprocity, check the convenience-of-the-employer test, and count days carefully. Track presence and residence to allocate income and reduce double claims. Consider FEIE or treaty protections if you live abroad.

Coordinate early with your employer to set correct withholding, SUTA registration, and payroll reporting. Remember that taxable benefits and stipends count as income and can affect state income withholding.

Keep clear records, update HR, and consult a qualified professional when unsure. Small steps now can save you time and money later as a remote worker managing multi-state obligations.