That being said, each state has its own rules about what taxes are due, and some states have no income tax at all which means you only need to think about the federal tax. owe both income tax and payroll tax, so you will have to pay taxes in both the state you live in and the state you work in (or where your employer is based).įor example, if the company is based in North Carolina, but the employee lives in New York then the employer will need to register for taxes in both states. To help, let’s break down some of the key factors you need to be considering when looking at your taxes as a remote worker or company. It’s no wonder that remote workers can get lost trying to work it all out. If you work outside of the US entirely then you will have local tax laws to follow too.
Then there is the understanding of state taxes vs federal taxes. With remote work taxes, you need to consider so many different things, including your location, where the company is based, and where you do most of your work. Remote employees today need to prepare to take ownership of their own bookkeeping and taxes no matter what state or country they are in. Unfortunately, this setup makes it a little bit more difficult for remote employers and employees that are aiming to stay legally compliant. More often than not, the best way to hire someone remotely is through a contracting agreement, but what does this mean when it comes to taxes? Today, the biggest disadvantage that remote companies and employees face is the lack of protection under domestic employment laws.
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