Tax Rules for Out-of-State Workers

Many states have existing reciprocity agreements with their neighboring states, allowing workers, particularly those who live close to the state borders, to work in one state but pay income taxes in their state of residence. In recent years, however, as states are looking under rocks for more revenue, some of these reciprocity rules have been rescinded. But that's a different story. The Mobile Workforce State Tax Simplification Act of 2011 (we expect the year will change to 2012 if this ever becomes law) addresses the issue of workers who do a part-time gig in a state where they don't live.

Rather than have to file a tax return in each state where a worker logs some time, this legislation will allow employees to work in a state where they don't live for up to 30 days without owing income taxes to the state. The employee is not off the hook - he still must pay income tax on the income, but the tax liability would reside where the employee resides. However, athletes, entertainers, and politicians are not eligible to play by these rules. They are perceived to be earning enough money that the host states still want their cut.


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Caleb Newquist is the Editor-in-Chief of Sift Media US, overseeing content for both AccountingWEB and Going Concern.

Prior to this role, Caleb served as the editor of Going Concern since its founding in 2009. During his time as editor, Going Concern quickly became one of the most popular and talked about websites in the accounting profession. He has been named one of Accounting Today's Top 100 Most Influential People every year since 2011 and has been published on numerous websites, including Above the Law, Deadspin, Denver Business Journal, and the Huffington Post.

Caleb is an adjunct professor of journalism the Community College of Denver in Denver, Colorado, where he teaches Internet Media.

Prior to falling bass ackwards into the media business, Caleb spent over five years working in public accounting, with more than three of those years at KPMG. Caleb received a Master of Science in Accounting from Colorado State University and a Bachelor of Science in Business Administration from the University of Nebraska at Kearney.

Caleb spends a lot of time on a bicycle and reading, but never at the same time.

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