Knowing how to manage your taxes has become more crucial than ever as working remotely becomes the new norm in the US. To prevent surprises during tax season, you should be aware of Form 1040 and state filing for remote workers if you work from home or even from a different state than your employer.
What is Form 1040 and State Filing for Remote Workers?
Every American taxpayer submits their income, credits, and deductions to the IRS using Form 1040, the standard federal income tax return.
Filing Form 1040 is only the first step for remote workers; depending on where you live and where your employer is located, you may also need to file one or more state tax returns.
- Your state filing requirements when working remotely are determined by:
- The state in which you currently reside
- The location of your employer (where the business is based)
- State laws pertaining to taxes on remote work
While some states may require you to file and pay in both states, others have “reciprocity agreements” to prevent double taxation.
What State Are You Taxed In If You Work Remotely?
Even if your employer’s office is located in a different state, if you work remotely, you are typically taxed in the state in which you live and conduct business.
There are some exceptions, though. If your remote work arrangement is for your convenience rather than necessity, some states (like New York and Delaware) may tax you according to your employer’s location. This is known as the “convenience of the employer” rule.
To find out which state you are in for taxes:
- Verify whether your employer’s state and your home state have a reciprocal tax agreement.
- Verify where your income was reported by looking over your W-2 form.
- For specific advice, see a CPA or the tax websites of both states.
How Long Can I Work Remotely in Another State?
The laws of that state determine how long you can work remotely before you owe taxes. There is a “threshold” in many states, usually between 30 and 60 days, before you are deemed liable for income tax.
For instance:
- California: Tax obligations may arise from a single workday.
- Florida and Texas: No problem because there is no state income tax.
- New York: Has stringent regulations and may impose taxes on remote workers according to the location of their employers.
Keep track of the number of days you work and the money you make in each state if you are temporarily employed there. When filing Form 1040 with multiple state returns, this information is essential.
Working Remotely in a Different State Than Your Employer
You might have two tax obligations when you work remotely in a state other than your employer’s: one to your home state and another to your employer’s state.
This is how it usually operates:
- Home State: Based on your entire income, you probably owe resident taxes.
- Employer State: If your employer’s state mandates it, you might be responsible for paying nonresident taxes.
In order to prevent double taxation, many states permit you to claim a credit for taxes paid to another state on your resident return. To make sure your state withholdings correspond with your actual place of employment, it’s critical to communicate with your payroll or HR department.
IRS Rules on Remote Workers
The IRS rules on remote workers primarily affect federal taxes, not state taxes.
Here’s what the IRS requires:
- All income earned, regardless of where you work, must be reported on Form 1040.
- If you’re an independent contractor, you’ll receive Form 1099-NEC instead of a W-2.
- You can deduct home office expenses if you’re self-employed — but not if you’re a regular employee.
The IRS doesn’t determine which state you owe taxes to, that’s decided by state tax agencies. However, you must ensure your Form 1040 correctly reports total income, and your state filings reflect where it was earned.
Temporarily Working Remotely in Another State Taxes
You might still be subject to taxes in the state where you temporarily work remotely, such as when you visit relatives or stay for a brief period of time.
Important things to think about:
- Although some states do count even brief stays, temporary presence does not always result in a tax obligation.
- You might have to submit a nonresident return in order to get a refund if your employer withholds taxes for a different state.
- Maintain thorough records of your work location and duration.
Verify the regulations of both states to make sure you are in compliance if your temporary remote work lasts for several months.
What State Taxes Do I Pay If I Live in One State and Work in Another?
If you live in one state and work in another, you may owe taxes in both, but you typically won’t pay twice on the same income.
Here’s how it breaks down:
- You’ll file a nonresident return in the work state (to report income earned there).
- You’ll file a resident return in your home state (to report all income).
- You’ll usually receive a credit for taxes paid to the work state on your resident return.
States like New Jersey and Pennsylvania or Illinois and Iowa have reciprocal agreements, allowing you to pay taxes only where you live.
FAQs About Form 1040 and State Filing for Remote Workers

1. Do I have to pay taxes in both states if I work remotely?
Possibly. If your home state and your employer’s state both tax income, you may need to file in both. However, you’ll generally receive a credit on your home state return for taxes paid elsewhere to avoid double taxation.
2. Do I need to include Form 1040 with my state return?
No, your Form 1040 is a federal return, while state returns are filed separately. Some states may request a copy of your federal return for verification, but it’s not automatically included.
3. What happens if you work remote in one state but live in another?
You may need to file two tax returns, a resident return where you live and a nonresident return where your employer is based. Always check whether your states have a reciprocity agreement.
4. How do taxes work if I live in one state and work in another?
Your work state can tax the income you earn there, and your home state can tax your total income. You’ll likely claim a tax credit on your home state return to offset the tax already paid to the work state.
Conclusion
For remote workers, state filing and Form 1040 filing can be complicated, particularly when several states are involved. Understanding your tax obligations, keeping thorough records of your employment, and accurately filing your federal and state returns are crucial.
Although working remotely allows for greater flexibility, it also entails additional tax-related responsibilities. You can avoid penalties and save time and stress by speaking with a certified public accountant or other tax expert who has experience with multi-state filings.