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Telecommuters: Beware of State Income Tax Complications

A recent pronouncement by the United States Supreme Court—the highest court in the land—may encourage individual states to begin taxing telecommuters crossing state lines.

Facts of the case: A computer programmer living in Nashville, Tenn., worked for a company located in New York. The programmer spent only 25% of his total work time at the New York office; the other 75% of the time he worked from his home in Nashville. This arrangement was made mainly for the programmer's convenience.

When a New York court ruled that the programmer was subject to New York State income tax, he objected under the grounds that the state law was unconstitutional. Then he appealed to the U.S. Supreme Court. But the nation's top court refused to hear the case. In effect, this gives a green light to revenue-hungry states to pursue similar types of claims.

Practical advice: Consult with a professional tax adviser for an analysis of your personal situation.

 

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