Remote and hybrid work has made it easy to live in one state while working for an employer headquartered in another—or to work remotely from abroad. However, state revenue departments have strict residency and source-income rules that can catch remote workers off guard.
1. Domicile vs. Statutory Residency
If you moved mid-year (for example, from California or New York to Texas or North Carolina), you generally must file part-year resident returns in both states, allocating income based on the exact dates you lived and worked in each jurisdiction. Keep lease agreements, utility bills, and travel logs to substantiate your move date.
2. "Convenience of the Employer" States
States like New York, Delaware, Pennsylvania, and New Jersey enforce "convenience of the employer" rules. If your assigned office is in New York but you work remotely from another state for your own convenience rather than employer necessity, New York may still tax your wages unless properly structured.
3. Claiming Credits for Taxes Paid to Another State
When two states tax the same wage income, your resident state typically grants a credit for taxes paid to the non-resident work state—provided both returns are prepared in the correct sequence.