UHERO BRIEFS ARE CIRCULATED TO STIMULATE DISCUSSION AND CRITICAL COMMENT. THE VIEWS EXPRESSED ARE THOSE OF THE INDIVIDUAL AUTHORS. WHILE BRIEFS BENEFIT FROM ACTIVE UHERO DISCUSSION, THEY HAVE NOT UNDERGONE FORMAL ACADEMIC PEER REVIEW.
By Robert D. Ebel and James Mak
Covid-19 has accelerated the growth of teleworking/telecommuting in the U.S. As a result, states are having to confront the challenge of determining how best to tax the incomes of employees who live in one state but work remotely for employers located in another state. In Hawaii a resident is taxed on income from all sources (some of that may be taxed by other tax jurisdictions as well) while the nonresident is taxed on income from Hawaii sources only. To avoid double-taxation, 41 states and the District of Columbia that have a broad based personal income tax allow income taxes paid to another state to be credited against income tax liabilities in their home state. For nonresident filers, calculation of Hawaii sourced income is based on the number of days an employee is physically present in Hawaii.
2 thoughts on “Taxing Income in the New World of Teleworking”
Any thoughts about the wisdom of sourcing services according to place of consumption, as opposed to place of performance, for purposes of the GET?
An update. On June 28th, 2021 the U.S. Supreme Court rejected New Hampshire’s complaint against Massachusetts without comment.