Income Taxes for the Remote Worker

Have you been one of the workers that, due to Covid-19, your workplace has changed and you have been/are working remotely from your place of business? 

If so, here are a couple of things to consider when preparing your individual income tax return:

  • In what state are you working remotely?  Is it different than the location of your employer/regular workplace?  If you reside in a different state, could your wages be considered as non-resident income?  Could you be required to file state/local income tax returns in both your place of residence as well as your employer’s locale? 
  • What are the deductions and tax implications for claiming expenses for home offices on your personal income tax return?  Are they deductible – most likely not but for certain situations.

WOW – those two items could have major impact on your taxes.  So, what should you do? First and foremost, educate yourself.  Become acquainted with the Remote and Mobile Worker Relief Act of 2021. 

If you have a professional prepare your taxes, make certain that they are familiar with the ins and outs of remote workers.  Don’t just assume that they will know that you may have a Form W-2 issued by your employer in one state and know that you didn’t work in that location. 

All paid preparers must have a Preparer Tax Identification Number or a PTIN.  If your preparer does not have one, you may want to find someone who does.  For a preparer to obtain a PTIN is not difficult but it proves that the preparer is registered with the IRS to prepare taxes.  The IRS publishes a directory of tax professionals for reference.  And, always remember that sometimes the expression “you get what you pay for” is true.  Just because you could have your taxes prepared cheaper does not mean that the preparer is a professional and will stand behind the return they prepare.  Credentialed professionals are required to have continuing education to keep up with the changes and laws. 

Protect yourself.  Be truthful with regard to your taxes.  Because, if you don’t, you could face interest and penalties for incorrectly prepared returns.  Remember, in our electronic world, the taxing authorities have access to information that could catch up to you.  Finally, if you are paying someone to prepare your taxes, do your due diligence and ensure that they have the credentials to do so.  (Many preparers in the pop-up locations at this time of year do not have the familiarity with tax laws that true tax professionals have.)

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About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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