Remote Work Taxes – Stick It to Them Before They Stick It To You
Remote work taxes has been a warm topic until this week when it suddenly went nuclear into a hot topic. This was to be expected in light of the fact that states are hemorrhaging money. Taxpayer dollars aren’t coming in fast enough and state governments are panicking.
A fiscal civil war has broken out among several states all battling over remote work taxes AKA your money. Instead of joining the fight the smart play is to remove yourself from this clash of the titans. Don’t allow them to make their money problem your problem.
So how do you avoid excessive remote work taxes?
As I see it you have two viable options.
1) Move to a state with zero income tax. If you live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Washington, or Wyoming you won’t pay them a penny in state income tax. Depending on your situation, you might not be scot-free but you should be out of the deepest, darkest woods.
2) Beg, borrow or sell your soul to become a 1099 remote worker. When you stop getting a W-2 and start getting a 1099 reporting the money you earned you become the master of your monetary destiny and much more besides.. There are perils and pitfalls to be avoided, chief among them – if you become a 1099 contractor, you stop working WHEN your employer tells you to, you stop being told exactly HOW to do any given assignment, etc. You are paid on pure performance. Of course, your client (formerly known as your employer) is entitled to tell you when they can expect any given deliverable and specify requirements as to what you need to deliver. Beyond that, the rest is largely up to you.
If push comes to shove settle for option 1 but always shoot for option 2. Otherwise, one titan or another might squash you like a bug under the oppressive weight of remote work taxes.
[ DISCLAIMER: The Association of Online Professionals does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. ]