| Still working remotely? Your 2021 taxes may be more complicated than your 2020 return | | |  | WED, JUL 21, 2021 | | | | If you are a worker who moved to a different state since the pandemic began and you plan to continue working remotely, you could find the going quite complicated when you file your taxes next year.
As CNBC's Sarah O'Brien reported, many states offered a pandemic-related reprieve that generally resulted in no tax filing obligation for remote workers who temporarily worked within their borders. The leniency was for 2020 returns. However, as the nation emerges from the pandemic, that compliance break for 2020 will be going away.
Chances are that remote workers will have to file the usual state taxes on their 2021 returns — and that could cause some serious headaches if you haven't done the research on your own state's filing obligations.
Of those workers who were still doing their jobs remotely in late 2020, about 30% said they were working in a different state than where they had lived and worked pre-pandemic, according to a recent survey. What's more, 72% of those surveyed admitted they were not familiar with their own state's tax requirements for remote work.
The confusion is understandable when you consider that states often take very different approaches regarding when and how income should be reported. However, as O'Brien reports, the rules don't necessarily mean you'll be paying more overall in taxes because most states provide a tax credit to eliminate double taxation.
For remote workers, all of these varying rules mean it's important to know the state laws that will affect you. Getting your paycheck withholding right is generally a shared responsibility between you and your company, CPA Michael Bannasch told CNBC.
The most important concept for an individual who is a remote worker to understand is that whatever state you are a resident of gets to tax your wages, regardless of where you earned them, Bannasch explained. However, he said, you might have a tax liability in another state if you earn money or work there or if it's where your company is located, depending on the states involved.
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