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PR Question - which one is the employee state?


BulldogTom

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I am not doing PR returns anymore because of situations like this.   CA company wants to hire a former employee.   The former employee moved to AZ a couple years ago when she married a military member.   They have permanent residency in AZ, but are now stationed in GA.   The employee would be remote and work from GA, or whatever state they are in while the spouse is in the military.   I think I remember a special rule for military spouses in this situation...

Also, does having a remote employee in GA or AZ create an income tax filing requirement for the CA employer?   

Tom
Longview, CA

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Not sure on the military rules. But, for the employer, they essentially open an office wherever the employee physically works from. It is an added expense, double reports, etc. the military exemptions may be regarding to the employee’s personal return, and likely does not change what the employer has to do.

Mybisial advice is to keep it simple  employer considers all work at locations as if the employer opened shop there. I also caution about creating employer protective work rules, such as setting hard work hours, for not working at pre approved locations, such as not at a coffee shop, etc.  Another one to consider is mo kids or pets in the work space during work hours, and good time clock reporting, with in and outs every time the employee leaves the designated work space.

For mobile employees, there may be different rules based on location worked and number of days. When we travel, I make sure not to cause nexus in any other state. 

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"The federal Military Spouses Residency Relief Act allows spouses of military servicemembers to travel with the servicemember to the state where the servicemember is stationed, keep their residence in their home state, and claim exemption from income tax in the state where they work, generally by filing a form, Medlock said. The law was amended at the end of 2018 by the Veterans Benefits and Transitions Act (Pub. L. 115-407), which allows the spouse to assume the servicemember’s state of residence for tax purposes upon marriage."

This appears to be an exemption from the state income tax not from employment taxes.

Also see this article:   https://www.claconnect.com/en/resources/articles/2021/tax-surprises-with-work-from-home-policies

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Thank you.  I had seen it before, but since my perspective is on the employer, it never "sticks" in my memory.  The entire issue of remote employees, or even not disallowing employees to check email (for instance) away from an approved location or outside of allowed hours, is something most ignore.

The risks are very real, and costly if ignored.

One state recently clarified their policy is essentially they will ignore the situation until over 20 days worked in their state in a year.  BUT, this sort of thing is helps employers ignore the fact that taxation and domicile have zip to do with nexus for all other reasons, such as worker's comp.  While an employer cannot prevent nexus issues (cannot chain employees to approved work locations), they can and should have work rules which make unapproved time and location against the work rules.

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