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Interesting, I’m not quite certain how a state has the authority to tax residents of another state to begin with. Anyone have some case law on the subject handy

Interesting, I’m not quite certain how a state has the authority to tax residents of another state to begin with. Anyone have some case law on the subject handy? EDIT: I’d like to add in purely talking about W-2 or 1099 income tax. There are various other arguments to be made about income from sources such as ownership in a corporation or partnership registered in a foreign state that I’ve no desire to get into, as that’s possible to work around by moving the entity.

ghaff 6y ago
I don't have any case law and am not a lawyer, but if you live in one state and work in another, the state you work in can absolutely tax you. As I understand it, there's some truing up between the states, but in this case it's pretty simple. Even if you live in no income tax NH, if you work in relatively high tax MA, you pay MA taxes.
- rlanday 6y ago
  The issue here is the people no longer work in Massachusetts. They may not even be setting foot in Massachusetts. My situation is that I used to work in Google’s NYC office but live in New Jersey (and have lived here since pre-COVID) and have set foot in New York maybe like six times since March, never for any work-related purpose, yet New York is still withholding income taxes.
  - ghaff 6y ago
    Sure. And people I know are moving officially remote to NH and will not be going into an MA office except rarely so they will/should no longer be on the hook for MA income taxes.
  - ghaff 6y ago
    Can't Google switch your status to remote? Or won't they? I think that's how things work where I am. (It doesn't really matter in my case as I live in the same state as my officially assigned office where I set foot in maybe a half dozen times in the past year.)
    - rlanday 6y ago
      They could, but they won’t. I think one reason is that management is trying to maximally maintain the pretense that we’re all going to return to the office in July (I don’t see how we can make everyone go back after ~15 months without losing a bunch of employees) to keep their options open. Another is that I think Google doesn’t want to pick a fight with a state government we have thousands of employees in, or get bad press for looking like we’re trying to get out of paying taxes; in both cases, it’s better for the company for employees to take independent action (e.g. asking New York for the money back when we file our returns and making the state government deal with us all individually if it really wants to play this game).
      - ghaff 6y ago
        Good luck though I suspect it will be challenging to the degree that your employer says that you are working out of a given office to claim otherwise.
        jessaustin 6y ago
        When California came after me for Hawaii income, all I had to do was send them a copy of my Hawaii returns. Someone who lives in NJ will file taxes there anyway.
        rlanday 6y ago
        My concern is that I will file the New Jersey return and pay taxes on the money I earned while working and living there, and file the New York return and ask for my money back since I don’t live or work there, and if New York denies the refund, I’ll be paying taxes in both states. It’s unclear at this point whether New Jersey will let New York claim all this taxable income or whether New Jersey will try to claim it for itself (it needs the money too). The tax rates are pretty similar in both states but my preference would be for the money to go to the state I actually live in.
        6y ago
  - ransom1538 6y ago
    "yet New York is still withholding income taxes" That is google. They don't have to withhold that. IF google didn't withhold that state tax -- it would be impossible for NY to figure out how much it is owed. You can ask google to not withhold for NY with a HR meeting.
    - rlanday 6y ago
      The withholding is based on Google’s understanding of the law (it’s not like they could just decide to not do it). I can’t ask Google to change their interpretation of the law since I’m not a lawyer.
  - beezle 6y ago
    It often revolves around whether the company has a physical place for you to work. Just because you are not using it may not alter the tax situation.
    - rlanday 6y ago
      New York has a rule about “convenience of the employer.” The name is misleading and doesn’t make any sense, but basically if there was no way to do the work in New York (e.g. your company sent you to New Jersey to hook up someone’s internet), it’s not considered New York-sourced income, but otherwise it is. The issue with the current situation is that in principle I could be doing the work in New York (it doesn’t matter where I do it), but the office is closed and I don’t live in New York. So I have strong reasons for not doing my work in New York, but in principle I could be doing it there. I guess there’s a further clause that you have to spend at least one day out of the year in New York to be taxed there, which unfortunately I have done (despite no longer traveling there for any work-related purpose).
clarkmoody 6y ago
The United States claims global taxation over its subjects. It's a similar concept.
- dantheman 6y ago
  Also immoral and wrong.
  - koolba 6y ago
    I’d argue the global taxation at the Federal level is more justified. You’re paying for the right to flee back from anywhere on Earth and have the doors of the USA swing open for you.
    - randyrand 6y ago
      you're paying for much more than just that, realistically. It's a lot of money.
    - imgabe 6y ago
      Citizens of every other country in the world are also able to flee back to their home country without having to pay tax in a place they don't live.
      - Natsu 6y ago
        As I recall, the tax is set so that it only affects people getting a relatively hefty amount of income and there's a credit on taxes paid outside the country. But yeah, it's complex and it sucks and everything I know about it came from reading patio11's posts on it.
        patio11 6y ago
        There's a Foreign Earned Income Exemption which will eliminate the tax payment requirement for most people on wage income, but you'll be taxed on investments/interest from the first dollar. People with income higher than the FEIE who pay taxes to a high-tax high-service jurisdiction (like Japan) will generally use the foreign tax credit to take care of most of their liability; folks who live in a low-personal-income jurisdiction like Hong Kong and are high-paid get smacked pretty hard. There exists a plethora of compliance problems which are worse than the actual taxation, for example the PFIC regulations which make it non-economic to do standard middle class investment abroad for e.g. a child's education. Advocates for Americans overseas are trying to get the PFIC and FATCA regulations overturned or get safe harbors expanded dramatically, but there exists a feeling in Washington that the only Americans who'd have bank accounts or mutual funds outside the US are "fat cats" (get it?) trying to abuse the tax system rather than pretty typical taxpayers with pretty typical life choices.
koolba 6y ago
If you work in another state then your subject to their tax jurisdiction. The issue here is you’re not actually setting foot in the other state so it’s looking more like a cash grab. I’d bet the question is gonna hinge on whether the office location of the work has been updated in company records. If your “office” is still on the corporate books in Taxachussets then you’ll have to pay.
- strombofulous 6y ago
  Why does it matter where you (physically) step foot? I think WFH has proven that crossing the physical of land barriers is no longer required to do much of anything.
  - koolba 6y ago
    Because when you walk into some other State’s backyard they have the right to demand a toll. Somewhat related, if you’re on the books as working out of their backyard, they will again demand a toll.
  - rlanday 6y ago
    If a Google employee ostensibly works in “the NYC office” but hasn’t set foot in the office in over >6 months (will be like 15 months by the time Google’s asking people to be back in July), lives in another state (e.g. New Jersey, maybe the employee took advantage of the remote work conditions to Florida or Texas)…how long should New York be able to tax this person despite the fact that they don’t live or work in New York? Google’s also not headquartered in New York. Google could move everyone in the computer to e.g. the Seattle or the Austin office (but are currently refusing to do so) if we’re all working remotely anyway.
    - free652 6y ago
      As long as he works for NY office he will pay NY taxes. He would need to ask Google to switch his office's location.
      - 6y ago
tclancy 6y ago
Don’t look at Maine then. They come for your spouse too.
patio11 6y ago
Taxation isn't primarily by residency but rather by income source, and sourcing rules make it very easy to have income attributed places other than where you live. (I was taxed by both California and Illinois in 2019 despite continuous residence in Tokyo, due to being physically present in each jurisdiction for N days and working during some portion of them, with N in the ~20ish region.)

ghaff 6y ago

I don't have any case law and am not a lawyer, but if you live in one state and work in another, the state you work in can absolutely tax you. As I understand it, there's some truing up between the states, but in this case it's pretty simple. Even if you live in no income tax NH, if you work in relatively high tax MA, you pay MA taxes.

rlanday 6y ago
The issue here is the people no longer work in Massachusetts. They may not even be setting foot in Massachusetts. My situation is that I used to work in Google’s NYC office but live in New Jersey (and have lived here since pre-COVID) and have set foot in New York maybe like six times since March, never for any work-related purpose, yet New York is still withholding income taxes.
- ghaff 6y ago
  Sure. And people I know are moving officially remote to NH and will not be going into an MA office except rarely so they will/should no longer be on the hook for MA income taxes.
- ghaff 6y ago
  Can't Google switch your status to remote? Or won't they? I think that's how things work where I am. (It doesn't really matter in my case as I live in the same state as my officially assigned office where I set foot in maybe a half dozen times in the past year.)
  - rlanday 6y ago
    They could, but they won’t. I think one reason is that management is trying to maximally maintain the pretense that we’re all going to return to the office in July (I don’t see how we can make everyone go back after ~15 months without losing a bunch of employees) to keep their options open. Another is that I think Google doesn’t want to pick a fight with a state government we have thousands of employees in, or get bad press for looking like we’re trying to get out of paying taxes; in both cases, it’s better for the company for employees to take independent action (e.g. asking New York for the money back when we file our returns and making the state government deal with us all individually if it really wants to play this game).
    - ghaff 6y ago
      Good luck though I suspect it will be challenging to the degree that your employer says that you are working out of a given office to claim otherwise.
      - jessaustin 6y ago
        When California came after me for Hawaii income, all I had to do was send them a copy of my Hawaii returns. Someone who lives in NJ will file taxes there anyway.
        rlanday 6y ago
        My concern is that I will file the New Jersey return and pay taxes on the money I earned while working and living there, and file the New York return and ask for my money back since I don’t live or work there, and if New York denies the refund, I’ll be paying taxes in both states. It’s unclear at this point whether New Jersey will let New York claim all this taxable income or whether New Jersey will try to claim it for itself (it needs the money too). The tax rates are pretty similar in both states but my preference would be for the money to go to the state I actually live in.
        6y ago
- ransom1538 6y ago
  "yet New York is still withholding income taxes" That is google. They don't have to withhold that. IF google didn't withhold that state tax -- it would be impossible for NY to figure out how much it is owed. You can ask google to not withhold for NY with a HR meeting.
  - rlanday 6y ago
    The withholding is based on Google’s understanding of the law (it’s not like they could just decide to not do it). I can’t ask Google to change their interpretation of the law since I’m not a lawyer.
- beezle 6y ago
  It often revolves around whether the company has a physical place for you to work. Just because you are not using it may not alter the tax situation.
  - rlanday 6y ago
    New York has a rule about “convenience of the employer.” The name is misleading and doesn’t make any sense, but basically if there was no way to do the work in New York (e.g. your company sent you to New Jersey to hook up someone’s internet), it’s not considered New York-sourced income, but otherwise it is. The issue with the current situation is that in principle I could be doing the work in New York (it doesn’t matter where I do it), but the office is closed and I don’t live in New York. So I have strong reasons for not doing my work in New York, but in principle I could be doing it there. I guess there’s a further clause that you have to spend at least one day out of the year in New York to be taxed there, which unfortunately I have done (despite no longer traveling there for any work-related purpose).

clarkmoody 6y ago

The United States claims global taxation over its subjects. It's a similar concept.

dantheman 6y ago
Also immoral and wrong.
- koolba 6y ago
  I’d argue the global taxation at the Federal level is more justified. You’re paying for the right to flee back from anywhere on Earth and have the doors of the USA swing open for you.
  - randyrand 6y ago
    you're paying for much more than just that, realistically. It's a lot of money.
  - imgabe 6y ago
    Citizens of every other country in the world are also able to flee back to their home country without having to pay tax in a place they don't live.
    - Natsu 6y ago
      As I recall, the tax is set so that it only affects people getting a relatively hefty amount of income and there's a credit on taxes paid outside the country. But yeah, it's complex and it sucks and everything I know about it came from reading patio11's posts on it.
      - patio11 6y ago
        There's a Foreign Earned Income Exemption which will eliminate the tax payment requirement for most people on wage income, but you'll be taxed on investments/interest from the first dollar. People with income higher than the FEIE who pay taxes to a high-tax high-service jurisdiction (like Japan) will generally use the foreign tax credit to take care of most of their liability; folks who live in a low-personal-income jurisdiction like Hong Kong and are high-paid get smacked pretty hard. There exists a plethora of compliance problems which are worse than the actual taxation, for example the PFIC regulations which make it non-economic to do standard middle class investment abroad for e.g. a child's education. Advocates for Americans overseas are trying to get the PFIC and FATCA regulations overturned or get safe harbors expanded dramatically, but there exists a feeling in Washington that the only Americans who'd have bank accounts or mutual funds outside the US are "fat cats" (get it?) trying to abuse the tax system rather than pretty typical taxpayers with pretty typical life choices.

koolba 6y ago

If you work in another state then your subject to their tax jurisdiction. The issue here is you’re not actually setting foot in the other state so it’s looking more like a cash grab. I’d bet the question is gonna hinge on whether the office location of the work has been updated in company records. If your “office” is still on the corporate books in Taxachussets then you’ll have to pay.

strombofulous 6y ago
Why does it matter where you (physically) step foot? I think WFH has proven that crossing the physical of land barriers is no longer required to do much of anything.
- koolba 6y ago
  Because when you walk into some other State’s backyard they have the right to demand a toll. Somewhat related, if you’re on the books as working out of their backyard, they will again demand a toll.
- rlanday 6y ago
  If a Google employee ostensibly works in “the NYC office” but hasn’t set foot in the office in over >6 months (will be like 15 months by the time Google’s asking people to be back in July), lives in another state (e.g. New Jersey, maybe the employee took advantage of the remote work conditions to Florida or Texas)…how long should New York be able to tax this person despite the fact that they don’t live or work in New York? Google’s also not headquartered in New York. Google could move everyone in the computer to e.g. the Seattle or the Austin office (but are currently refusing to do so) if we’re all working remotely anyway.
  - free652 6y ago
    As long as he works for NY office he will pay NY taxes. He would need to ask Google to switch his office's location.
    - 6y ago

tclancy 6y ago

Don’t look at Maine then. They come for your spouse too.

patio11 6y ago

Taxation isn't primarily by residency but rather by income source, and sourcing rules make it very easy to have income attributed places other than where you live. (I was taxed by both California and Illinois in 2019 despite continuous residence in Tokyo, due to being physically present in each jurisdiction for N days and working during some portion of them, with N in the ~20ish region.)