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Telecommute Tax Relief Gathers Steam 339

Posted by ScuttleMonkey from the double-whammie dept.
coondoggie writes to tell us NetworkWorld is reporting that backers of new telecommuter friendly tax legislation have high hopes that this might be the year that it sticks. From the article: " If passed, the Telecommuter Tax Fairness Act would prevent states from taxing income that nonresidents who telecommute to an in-state employer earn while working from home. The legislation is aimed in particular at New York, which is legendary for its stance on nonresident teleworkers. It requires those who sometimes work in the office of their New York employers to pay state taxes -- not only on the income they earn while physically in New York, but also on the income they earn at home. This often results in a double tax when the telecommuter's home state expects tax on the income the telecommuter earns at home."
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Telecommute Tax Relief Gathers Steam More

Telecommute Tax Relief Gathers Steam

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  • It'll never pass (Score:3, Insightful)

    by Jason1729 ( 561790 ) on Tuesday May 23, 2006 @04:11PM (#15389278)
    This legislation is aimed to help average workers. There's little benefit for big business or legislators. It will never pass.

    • Re:It'll never pass (Score:3, Funny)

      by Anonymous Coward
      It does.

      Considering all of those telecommuters in India!

    • It has far better chance of passing on a per-state basis. They should heavily lobby the NY state legislature to change their tax code. I'm assuming they aren't doing this currently. But I get the feeling lobbying for anything which reduces state income will be very very hard to pass.
    • Never underestimate the power of an election year. It just might pass.

    • Not good for big business? Exactly what is the biggest expense that business has to pay in the United States?

      Answer: Salary

      So please, raise your hand with me if you would be willing to be PAID LESS if you could WORK FROM HOME?

    • This legislation is aimed to help average workers. There's little benefit for big business or legislators. It will never pass.

      You have to wonder. The GOP was all hot and bothered about eliminating the capital gains tax which they referred to as "double taxation." Will they fight for relief of this tax which really is double taxation?

      The main difference between the two: Rich guys get capital gains while average folks telecommute.

      I think the GOP has a chance to show what kind of a party they really are. I

      • Re:It'll never pass (Score:4, Interesting)

        by HTH NE1 ( 675604 ) on Tuesday May 23, 2006 @05:48PM (#15389974)
        My state taxes my state tax refunds. They treat it as additional income, which is then taxed in the next tax year.

        That means that when they take more money than they were entitled to out of my paycheck, they get to use it for a year without paying me for the privilege. Then when I catch them at it and they return it to me, the next year they say are suddenly entitled to a piece of something they weren't entitled to before?

        So the government gets a one-year interest-free loan from me, then loans it back to me for a year, and then charges me interest on that!

        At least I don't have to telecommute and have to deal with double-taxation from two states. I live close enough to my workplace that I could walk, even in Winter.

        • Re:It'll never pass (Score:4, Insightful)

          by Elemenope ( 905108 ) on Tuesday May 23, 2006 @07:21PM (#15390462)

          WTF state are you in? And why haven't you sued them yet for equity? And why aren't there bloody mobs with bloody pitchforks storming the capitol? Though I believe you if you say so, I find this almost hard to believe. Boiling a frog with slowly rising taxes is one thing. Stabbing them in the eye with a skewer is something else entirely.

        • State Tax Refund Tax (Score:3, Informative)

          by wyatt27 ( 80173 )
          You may be misreading your weekly pay stub.

          The state tax refund is treated as "additional" income because it wasn't taxed to begin with. It's withheld from your net paycheck and, therefore, not taxed as income at that time. When you get it back via refund, it goes back in the "taxable income" column and is then taxed - after the fact.

          The feds do the same thing, in case you haven't noticed. You're supposed to declare any state tax refunds on your federal return.

          In all cases, the one-year-free-loan is accurat

    • Re:It'll never pass. Huh? (Score:4, Interesting)

      by Jaywalk ( 94910 ) on Tuesday May 23, 2006 @05:24PM (#15389808) Homepage
      There's little benefit for big business
      Excuse me? How do you figure? At this very moment, my butt is parked in an Michigan office with a tie around my neck doing work I could do at home in my bunny slippers. I've got an office all set up there and a high speed line to work with. Now assuming a $100 per hour billing rate, the client is shelling out about $4000 a week for my services. They're also shelling out about $1900 a week to fly me out from Boston, drive around in a rental car and sleep in a hotel.

      Are you saying big business wants to pay a 50% premium on consulting services?

  • not using infrastructure (Score:3, Insightful)

    by P3NIS_CLEAVER ( 860022 ) on Tuesday May 23, 2006 @04:12PM (#15389284) Journal
    This is only fair, if you aren't using the infrastructure of the city you shouldn't have to pay for it.
  • I never really understood this complaint. I live in the midwest. If I do some remote work for a client in New York, how do they expect to collect New York income tax from me? Do they have any legal recourse whatsoever to try to collect?

    What if my local employer opens a branch office in NYC. Do I owe NY taxes then, even though I don't work there? What if I do some remote administration for that office? What if they're connected via VPN and I occasionally browse fileservers on their LAN? At what point do I cross the line where they mistakenly think I should pay them something?

    I'm glad to see this legislation go through, even though I think it's incredibly stupid that there's a need for it.

    • Re:How could they make you pay it anyway? (Score:5, Interesting)

      by charleste ( 537078 ) on Tuesday May 23, 2006 @04:18PM (#15389336)
      Their legal recourse is to first bill you, then get a judgement (in NY) against you, and then your wages (from anywhere) are garnished. You can't just "not pay". Sucks, don't it? As far as how your "locale" is determined - that's up to your employer. I am a 100% telecommuter - in Colorado, and my "office" is in Tampa, FL.
      • Their legal recourse is to first bill you, then get a judgement (in NY) against you, and then your wages (from anywhere) are garnished.

        Should it ever come up, remind me to get a local judgement against Bloomberg for some fictional fee.

        As far as how your "locale" is determined - that's up to your employer.

        OK, then. Is there any incentive for your employer to list you as a NY employee?

        • OK, then. Is there any incentive for your employer to list you as a NY employee?


          Their offices are in New York, they file taxes in New York, the servers you're telecomuting are in New York, and they don't have any other offices?

          A better question is: "Why don't more buisnesses move out of New York?"
          • A better question is: "Why don't more buisnesses move out of New York?"

            Financial capital of the world?

            Besides, they don't give a shit how you and I get taxed.

            • Note that New York State is more than just New York City. The truth is that upstate many high-quality jobs *are* moving to other states due to high taxation, usually in areas where the loss of such jobs can further cripple an already devastated local economy.
              • Don't bet on it. There are very good reasons to stay in an area where air travel is cheap, the labor pool is huge, and there are more CEOs per square inch then any other place on the planet (maybe except hong kong).

                If you are selling your stuff to businesses you need to shcmooze with them. You need to be able to meet at the ultra chic bar or restaurant to wine and dine the CEO. When you get together you need to be able to talk to him/her in a common vernacular about shared experiences. You can't just pop on
              • The truth is that upstate many high-quality jobs *are* moving to other states due to high taxation, usually in areas where the loss of such jobs can further cripple an already devastated local economy.

                The scary part is that many of the upstate residents think their taxes are perfectly reasonable. My father-in-law thinks it's awful that I have to pay for garbage pickup, since the city of Buffalo provides his for free. Never mind that he's paying twice the taxes on half the house that I am; that extra $25

                • Perhaps they think the taxes are reasonable in the big upstate cities, but the people everywhere else aren't too happy. NYC's existence screws a lot of people upstate out of land (for reservoirs and their "protective" legislation), the city types that move north take the City with them, rapidly driving up taxes in those areas, and forcing the locals to move further away from NYC. Most of the state paid 50% of their taxes to NYC, Albany, and Buffalo for the last 30 years, and lost more and more of their co
                  • I don't live in NY, but I hear this same rational from people locally. The fact of the matter is, most of the taxes come from the city residents, so it's only natural that that most of the taxes should go to the city infrastructure. Rural taxpayers are not subsidizing urban dwellers. In fact, it's usually the other way around.

        • OK, then. Is there any incentive for your employer to list you as a NY employee?

          Inertia. I telecommute full time from Florida (and previously from England) to California. My employer kept reporting my income as CA income. I don't think there's any definite policy on it, though. I wasn't able to get a straight answer from anybody I talked to, and the wording of the tax pubs all lean towards reporting income as CA income. So it was up to me to convince them my income shouldn't be taxable by CA since

    • 1) If you are employed outside NYS, then you don't have to worry.

      2) If you are employed by a NYS company and you live in a state that doesn't have an office, then you could get taxed if you enter the state on business (You can enter for pleasure).

      3) If you are employed outside NYS by a NYS company, and you have an office in your state that you goto, then you don't pay NYS taxes.

      I think on point #2, if you are an at-will out of state employee, your living out of state becuase you want to, then you h
    • "What if my local employer opens a branch office in NYC. Do I owe NY taxes then, even though I don't work there? What if I do some remote administration for that office? What if they're connected via VPN and I occasionally browse fileservers on their LAN? At what point do I cross the line where they mistakenly think I should pay them something?"

      If you never work from the NY office, you're not a NY employee. Remote admin doesn't apply, you have to be phyisically present at NY base of operations for your

  • Heh (Score:5, Insightful)

    by SlashChick ( 544252 ) * <erica@noSpam.erica.biz> on Tuesday May 23, 2006 @04:14PM (#15389304) Homepage Journal
    From the article: "The U.S. Office of Personnel Management encouraged federal agencies to more aggressively promote fuel-consuming options such as teleworking in a September memo."

    Darn that Bush. I always knew he was conspiring with the oil companies! ;)
  • People being double charged for state taxes is a larger problem then just telecommuters. Many people who live close to a state line and work in another state end up double paying. Sometimes there are forms which can be used to avoid this but they are not widely publicised.
    • I used to live in CT and work in NY. In this case I can tell you I definitely was not double paying. NY transfered most of the tax witheld to pay for my CT tax. And I was required to file both NY and CT returns, so it certainly wasn't hidden.

      • Re:Much larger problem (Score:4, Informative)

        by gorbachev ( 512743 ) on Tuesday May 23, 2006 @05:08PM (#15389692) Homepage
        I would be surprised to find any instance of double taxes anywhere. I think the summary is just plain wrong.

        You get a tax credit from your home state for taxes paid in the state you work in. Or the other way around.

        If it didn't work that way, there would've been a revolt long, long time ago already.

  • Wow, it's about time. (Score:3, Interesting)

    by KiltedKnight ( 171132 ) * on Tuesday May 23, 2006 @04:20PM (#15389351) Homepage Journal
    This legislation could easily provide the kind of tax relief middle income families keep looking for so they can really put a little more away for retirement, kids' education, etc. Telecommuting already allows them to save money by not having to drive or ride public transportation all the time while leveraging something they're already paying for... a high speed internet connection.

    NY has always been a problem with taxing non-residents... whether they telecommute or not.

    I used to work in NYC while living in NJ. Even with going in to the office on a daily basis, NY wanted me to report all income (interest, dividends, side job not in NY, etc), then calculate the tax on that, using the non-resident scale, then multiply it by the percentage of my total income earned in NY. Net result is that I had to pay more in taxes instead of paying based solely on money earned in NY.

    • State tax rates are progressive. What that means is that someone earning $100k pays more than twice what someone earning $50k would pay. If you split your $100k paycheck between 2 states with identical tax rates, you shouldn't end up paying any less or more than someone who earned the entire income in one of those 2 state. Other states tax laws work the same way too - this isn't just NY.

  • No help for NJ residents (Score:5, Informative)

    by Red Flayer ( 890720 ) on Tuesday May 23, 2006 @04:21PM (#15389364) Journal
    I live in NJ, work in NY. NJ only taxes me on income not subject to tax in NY -- not income not earned in NY. Not sure about how other states deal with state taxes paid to another state.

    Sucks anyway for me, since NY state tax is approximately 2.5-3 times the NJ tax, and I derive very little benefit from the NY taxes I pay. But, for telecommuters who sometimes have to work in NY -- nice deal. Makes me want to telecommute and pay the NJ tax rate when I'm working from home.

    A scenario though -- if an employer has a telecommuting employee in another state, do they need to pay employment taxes in that state? My company has satellite offices in other states, and legally it's a bit of a pain. Would a company have to file also as a NJ employer if their telecommuting employees were treated as working in NJ while telecommuting?
    • Fairness wise, it ought to be the case that tax is due to the state in which the employee was physically located when the work was done, as presumably that is the state from which public resources were consumed. Of course, I'm doubtful that we'll ever reach such a situation, but this law might help.
      • In my case, some NY state resources would be consumed by me even if I telecommuted -- from what I understand I'm covered by NYS unemployment, not NJ, should I get shitcanned. Also, things like employment audits and other Buraeu of Labor stuff. I'm also covered by NY employment law, which is a little more restrictive to employers than NJ law (not that it matters one bit in practice).

        Of course, NJ and my municipality make a metric buttload of cash off me from sales tax and real estate tax, respectively --
    • 1) Employees at the satellite offices don't pay NY taxes. Why don't you use these offices as your base and telecommute to these?

      2) The business would probably have to establish a place of business in NJ (which probably couldn't be your house). Or, if your company really liked you, you could establish an LLC in NJ and consult. You'd save ALOT more than just state taxes that way.
      • As to 1), I can't. I regularly need to work from NYC, so an employment audit would fry my employer -- and they get audited regularly.

        As to 2), LLC not gonna happen -- I've tried :)

        And as to setting up a NJ Franchise, that's the legal PITA I was referring to. We already do it for CA, CT, and MA. CA is the worst, we pay CA Franchise Tax up the wazoo for only two employees -- let alone what they pay in income tax.
        • But you dont pay the city tax... the kids who live in the city use far less resources than you commutors i.e. public transportation and are not only hit w/ a higher cost of living but also hit w/ the city tax.. its like bloomberg wants people to leave the city..
    • I derive very little benefit from the NY taxes I pay

      You work in NY. So you're using NY services when in NY. If you get hurt you'll probably go to a NY hospital by the fire department or city ambulance. You probably take public transportation to get to work, which is partly subsidized by the city. Or you drive on NY roads. You're protected by NY police. Taxes may be high, but you do get significant benefits from them.

  • state tax reciprocity (Score:4, Informative)

    by hal9000(jr) ( 316943 ) on Tuesday May 23, 2006 @04:22PM (#15389373)
    This often results in a double tax when the telecommuter's home state expects tax on the income the telecommuter earns at home.

    I am pretty sure that Connecticut is the only state that doesn't have reciprocity for state taxes. IOW, in most states, you can deduct state taxes paid to another state so you don't get double whacked. This is useful for people who live on state borders. Of course, you accountant makes out better.check with your accountant.

    The people who really get screwed are those that don't pay any state tax.
  • Well, NY has long had the right to tax nonresident employees whose income comes from NY services. That's been an decades long debate for out-of-state commuters as well as the newer debate amongst telecommuters.

    That's a penalty to an employer and employee who sets up shop in NYC - just deal with it. Or leave.

    So, if the employer really liked you and wanted to support telecommuting, they'd just setup a satellite office in NJ or Connecticut and host a few servers there so that could be your main location. So bl

  • Fairness? (Score:2, Interesting)

    by d_54321 ( 446966 )
    If passed, the Telecommuter Tax Fairness Act would prevent states from taxing income earned by nonresidents who telecommute to an in-state employer while working from home.
    Why not just go all the way [fairtax.org] and not tax income?

  • The way to fix this is simple... (Score:3, Interesting)

    by zappepcs ( 820751 ) on Tuesday May 23, 2006 @04:51PM (#15389568) Journal
    well, more or less, try http://www.fairtax.org/ [fairtax.org] for a different method of taxation that would not care what state you earned the money in or from.
    • try http://www.fairtax.org/ [fairtax.org] for a different method of taxation that would not care what state you earned the money in or from

      Amazing. A national federal sales tax is supposed to eliminate State (i.e. non-federal) income taxes? The issue in TFA is double taxation by two different States, not the Federal government taxing someone twice.

    • It continues to amaze me the trememdous ammount of money and effort the rich put into trying to increase the gap even further...

      You have to make a special case for the poor, because that's where everyone looks first, but it just has to SOUND like it will help them... it can actually increase the burden on most of them even more than the current situation, as almost nobody will check the numbers, or ask for specifics.

      But you don't have any such restriction on the middle class. Everyone's worried about the

  • Comment removed (Score:4, Insightful)

    by account_deleted ( 4530225 ) on Tuesday May 23, 2006 @05:01PM (#15389636)
    Comment removed based on user account deletion
  • I think that any district that you pay taxes in you should also be allowed to vote in district wide elections (State, County, City). You should have a say in how things are being run if you are paying for it's support.

  • Taxation is for the birds. (Score:4, Interesting)

    by Fantastic Lad ( 198284 ) on Tuesday May 23, 2006 @06:33PM (#15390235)
    The idea is this:

    The people of a nation collectively put together a pile of money in order to do useful things which everybody agrees they need. Right? Building roads and water supply systems, police agencies, hospitals etc.

    But then. . .

    Who gets elected? Why, the people who are cut-throat and unfair in their methods. The ones who lie the best. --The ones who are drawn to power!

    Why do they win? Because they use all the normal tools to get elected which good people have, PLUS they also use lies and underhanded manipulations. They win over good-hearted people because good-hearted people limit themselves to only using above-board tactics. And so, with limited tool-boxes, the good guys tend to lose more often than the criminals, who arm themselves, not just with above-board tactics like posters and election promises, but also with wonky voting machines and hate-based propaganda about how they will punish, 'welfare moms'. (Which make up a microscopic fraction of the public spending in even the most socialist of nations). But Hate and Dark Side emotions are much easier to kindle in a voting public than rational thought. And anybody who is above hate will lose their vote anyway to a fixed voting machine. And if that doesn't work, the state-owned media will just lie about who won. Or they'll just kill the honest politicians in plane crashes. One way or another, the Dark Side wins time and again. The good guys don't stand a chance once the bad guys get in and own the game board!

    So these greedy, morally bankrupt politicians and their industry-owning friends realize, "Hey! Check it out. With my brother-in-law in office, I can get all kinds of policies passed which entitle me to a big slice of that nice juicy public cash pie without my actually having to earn it! People are plenty stupid, they'll believe any old lie, and we just have to organize it so that the state has all the guns. Keen! I can live high and never have to put in a real day of work ever again!"

    And so it goes.

    But. . .

    Because the greedy are greedy, they never feel like they have enough, and so the taxes rise, and the hidden taxes, (such as oil and energy), rise. And they cut away at the actual things a nation would probably want, like education funds and medical care. (You just trick the people through massive propaganda into believing that such things are bad for them. Sounds insane, but look around you.) With social spending cut, there's more money for the greedy politician and his friends and family.

    But somehow. . , even with the billions flowing into the politician's family coffers, it's still not enough. This is because greed is NOT good. Greed is a disease! --And so the greedy looked around to find new ways to make even more money, and they realized that it was advantageous to them if the other nations of the world never achieved first-world status. Cheep, 1-cent an hour labor is a great way to get and stay rich! --So they use the secret-service agencies to subvert and de-stabalize nations on the brink of industrial success. This is done through funding coups of legitimate foriegn leaders and channeling heavy narcotics trade through those nations. Drug corridor nations quickly become user nations. (The Opium War in China was a good example of how drugs were used to destroy a nation's growth momentum.)

    But high taxes and hidden taxes and entire slave nations are still are not enough for the greedy. Nope. --So they start wars, filling the people with fear, all to ensure that the people are too afraid to think rationally and otherwise recognize that they are being abused by their own government. --Plus, the weapons sales are another excellent way to cut into that nice juicy public cash pie!

    So what percentage of your tax dollars do you think are being spent on things the collective public actually wanted in the first place? 30 percent? 20 percent? I'm willing to bet it's even less.

    So what do you do about it?

    Well, you can't
    • So what then can be done. . ?

      (Pardon me while I play point/counter-point with myself)

      Are you suggesting violence? Well, that's stupid. It's a good way to create a lot of misery and chaos. --In particular, it's a good way to give the administration an excuse to let loose with its big guns and really enact a lock-down. Sorry, but you don't have enough fire-power to contest the government. Have you not read your Machiavelli? He described the very tactic; essentially, political judo with guns. You don't

  • I doubt this will end up as a good thing (Score:3, Insightful)

    by jjn1056 ( 85209 ) <jjn1056@@@yahoo...com> on Wednesday May 24, 2006 @12:22AM (#15391662) Homepage Journal
    Although I sympathize with telecommuters (I have state residence in NYC, but currently work in Beijing for a client in Atlanta) I doubt this law will end up helping us much. NY goes after a lot of telecommuters because a lot of companys use remote offices as a way to get around paying tax, not because they want to go after the 'little guy on a terminal in Michigan'. The same reasoning applies to people working in NYC but living in NJ or elsewhere, we ask them to pay NYC tax because the City is providing all the infrastructure necessary to help them become successful. It's just not fair for someone to make money because of all the effort and local tax dollars spent to make NYC a good place to do business and not contribute to that effort.

    I hear you when you say that why should I pay if I don't live there or if I don't go there to an office. But your clients do live there or work there and they are there because of the huge investment in tax dollars to make NYC a place for you to find clients. Otherwise you'd just find local clients. So it's reasonable to ask for you to pitch into that community effort. I think we just need to come up with a better way to measure that 'pitch in' amount and make sure it's directly tied to your direct benefit and not to pork projects in upstate NY that primarily benefit politicians trying to hold on to thier positions.

    My feeling is that this is just another wedge issue, like the marriage penalty tax, that certain people in Washington will use to push through more tax cuts for the wealthy or for corporations. We will get our commuter tax 'relief' but 100 times more in tax breaks to people with enough already will be attached to it.

    Personally I think all taxes are too high, but I am wary of people in washington with an agenda riding my annoyance to push through things I am not in favor of.

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