If I do business from home, which state can tax my earnings?

Q. I’m working as a development marketing consultant at age 73. My workplace is in Manhattan, however I’ve been working completely from my New Jersey since February 2020. This 12 months since I didn’t work in New York in 2021, I paid almost $7,000 to New Jersey on my 2021 return. I requested a refund of New York taxes taken from my paychecks, however New York has refused. Though I consulted on New York initiatives, I additionally consulted for initiatives in different states. The corporate has places of work in 5 states, none of that are in New York or New Jersey.

— Employee

A. It may be laborious to get quick solutions from the taxing authorities.

Because the begin of the pandemic, increasingly workers who work out of state have questions on which state they need to pay taxes to.

You didn’t clearly say whether or not you might be an worker or a 1099 contractor.

“If you’re a 1099 unbiased contractor, you’d supply your earnings primarily based on where the work is performed or primarily based on the place the profit is obtained by the shopper, relying on the state’s earnings tax guidelines and nexus guidelines,” mentioned Kenneth Bagner, a licensed public accountant with Sobel and Co. in Livingston

However the guidelines are very intricate, and also you would want to debate with a tax advisor the main points of your particular state of affairs.

If you’re an worker relatively than an unbiased contractor — because it appears you had withholding of New York taxes out of your pay — word that New York is taking a “powerful stance” that you simply nonetheless are a New York employee in case your workplace is in New York and you’re employed remotely in New Jersey on your personal comfort, Bagner mentioned.

“There are some methods round this, however New Jersey has a really inflexible take a look at to fulfill to show you’re a New Jersey worker, which is tough to fulfill,” Bagner mentioned, noting that this state situation may make its manner as much as the courts sooner or later.

You may ask New Jersey for a credit for the quantity of tax you paid to New York. Bagner mentioned. However there isn’t a assure New Jersey will agree.

“New Jersey could take the place that you simply work in New Jersey after which you’ll then be taxed in two states,” he mentioned.

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Karin Value Mueller writes the Bamboozled column for NJ Advance Media and is the founding father of NJMoneyHelp.com. Observe NJMoneyHelp on Twitter @NJMoneyHelp. Discover NJMoneyHelp on Facebook. Join NJMoneyHelp.com’s weekly e-newsletter.