Traveling to any state in the U.S. for work, am I considered to be earning income in the state I’m working in at the time?

by Eric J. Seidman, CPA | Jun 03, 2019

askacpaiconAs a field application engineer, I often travel to any of the 50 states for up to three weeks at a time to work on various projects. When I do this, am I considered to be earning income in the state that I am working in? Or am I simply considered to be earning a paycheck from my company in whatever state I reside in?

The answer to where income is considered to have been earned lends itself to the concept of nexus. The crux of the matter is whether the taxpayer, or his or her company, has created nexus by performing services in that city or state. Unfortunately, there is no uniform answer because it is ultimately left up to the states themselves. Based on the specifics of this situation, it is increasingly likely that the amount of time spent in the state plays a role. However, as is the case with professional athletes, even spending a day in another jurisdiction creates a taxable event. If the specific circumstances require you to file multiple nonresident income tax returns, you would likely be able to claim a credit for taxes paid to other states on your resident state income tax return. This is an issue to discuss with your employer. If it is customary for its employees to work in numerous states and it creates a filing requirement, the company may be able to withhold taxes from your pay to the appropriate jurisdictions based on your timesheet.

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Answered by: Eric J. Seidman, CPA, is with Wouch Maloney & Co. LLP in Horsham, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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