Taxation with duplication

Even though many legal barriers to teleworking have been eliminated over the past couple of decades, some of them persist. A particularly insidious barrier only applies to cross-state-border teleworkers. Since most teleworkers, even today, are telecommuters—living within commuting distance of their employer’s offices—this has not been a problem affecting thousands of people—so far. But, as I mentioned several months ago, some teleworkers are seriously affected by one barrier: double taxation.

The scenario is as follows: Janice teleworks for an employer in New York, say, but lives in California. Occasionally Janice goes to New York for meetings and conferences in her employer’s facilities but mostly she works from her home in California. She loves her job and is doing well at it. Except for one thing: New York wants to tax her income even though she earns it primarily in California. Of course, California also wants to tax the same income since she earns it there. What to do?

Several attempts have been made in Congress to stop this practice. All have failed, so far, to get to a vote. But hope springs eternal. A new attempt to rectify this double taxation situation has been made. Here are the details, as sent to me by that consummate master of telework legalities, Nicole Belson Goluboff:

I am writing to let you know that U.S. Representatives Jim Himes and Chris
Murphy have reintroduced the Telecommuter Tax Fairness Act in the House.
The new bill number is H.R. 5615.  This measure is the companion to S.
1811, which Senators Joseph Lieberman and Richard Blumenthal introduced in
the Senate.

As you may know, the Telecommuter Tax Fairness Act would eliminate the
threat interstate telecommuters currently face that they will be taxed
twice on the wages they earn when they work from home – once by their home
state and then a second time by their employer’s state.

I urge you to write to your Representatives to ask them to co-sponsor and
advance H.R. 5615 and to write to your Senators to ask them to co-sponsor
and advance S. 1811.  Abolishing the double tax penalty will remove a
significant tax barrier to telework’s growth.  By facilitating telework,
H.R. 5615 and S. 1811 will help Americans manage volatile gas prices;
reduce traffic congestion and carbon emissions; reduce the high cost of
repairing and expanding transportation infrastructure; help small
businesses slash costs and increase employment opportunities for job

I, too, urge you to contact your local Congress person and your Senators (whether or not your state taxes your income) to help see these bills get through the political maze and change the world for the better.

I also hope to have Nicole present a more detailed review of the situation in the next few months.

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