Tuesday, November 29, 2005

Telecommuter Gets Hit with Tax

Bad News for Out-of-State Telecommuters

Recently, a Tennessee man was ordered to pay taxes on his income by New York's highest court, even though he only works in New York 25% of his time. Thomas Huckaby, a computer specialist who spends the other 75% of his time in his home state, discovered that he will be taxed by both Tennessee and New York. As reported on HR.BLR.com:

"A New York State tax-department rule states that people who live out of state, work for a New York employer, and occasionally come to New York on business must pay taxes, even on work performed out of state, according to The Wall Street Journal. The only exception to the state's rule would be if the out-of-state work was done for the employer's "necessity". The New York Supreme Court ruled, in a 4-3 decision, that Huckaby had to pay taxes on all of his income."


As revealed in a recent Telework Advisory Group survey, there are approximately 9.9 telecommuters in the United States who now may face this additional tax. However, there is proposed legislaton, the Telecommuter Tax Fairness Act that would prohibit the practice of taxing telecommuters for work completed in another state.

According to The Wall Street Journal, Senator Dodd (D-CT) called Monday's decision "disappointing" and said it "underscores the need to take action on the legislation that I have introduced… Telecommuting reduces traffic congestion, reduces pollution, and helps businesses strengthen their bottom line. The current rules punish telecommuters rather than reward them and that needs to change."

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