What do remote workers mean for your tax obligations?

Brooke Wedgwood

3 minutes read time

December 02, 2021
Disclaimer: MRI Software LLC and its affiliates do 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

Offices are a far cry from Mad Men–style cubicles and dark rooms stacked with important papers. The pandemic pivot to digital saw meetings taking place anywhere from Zoom (a classic choice) to within the game Red Dead Redemption 2 (sitting around a campfire—wholesome).

With more and more people choosing to work from home, it is important for organizations to seek up-to-date tax advice. However, each state has different tax laws for remote workers.  Some organizations have been caught off-guard by income or sales taxes in other states where employees have been working remotely. And some workers haven’t filed a tax return where they should have, simply because they didn’t know they had to.

In a survey of more than 1,000 workers across the country, WhosOnLocation and Brivo found that 78% of respondents would prefer to work from home at least some of the time, rather than returning full-time to the workplace. Yes, remote work has had enormous benefits to all parties. Most respondents (75%) felt equally or more productive working at home, and many felt safer without having to commute to their workplace (due to pandemic concerns). But with all the innovation and flexibility a hybrid workforce can bring, there are some details you’ll need to iron out.

Some things for employers to consider

While not an exhaustive list, these are some things to look out for. Seek advice if you are unsure of your obligations.

  • Are you responsible for withholding any employment taxes for employee income earned remotely? If so, are the tax rates for remote work and on-site work different?
  • Does the “convenience rule” apply in your state?
  • Have you properly classified employees and independent contractors?
    Some states have strict rules about this, make sure you check your state’s gig worker classification regulations and laws.
  • Are you reporting correctly on which days are worked on-site and which are worked remotely?

Location reporting

With new tax complications surfacing with the rise in remote workers, comprehensive location reporting can make it much easier to fulfill your obligations.

WhosOnLocation: Reports at your fingertips

While keeping workers safe is always our priority, there are so many additional benefits to employers, contractors and employees. Having easy-to-prepare location reports for tax purposes is one of them.

WhosOnLocation lets workers indicate when they are working remotely upon sign-in, allowing you to pull simple reports to use at tax time.

Individual reports:

Pull reports for a single employee or contractor to show remote and on-site work within a specific timeframe.

Aggregate reports:

Report on when employees or contractors worked on-site or remotely. Use report filters to customize your results.

Above: Report showing days and hours worked remotely by employees in the selected time period (year-to-date).
Above: Report showing days and hours worked on-site by employees in the selected time period (year-to-date).

Live reports:

Sometimes, you might need to check how many employees or contractors are working on-site or remotely at any given moment. You can use WhosOnLocation to pull reports from live geolocation data (if enabled) or manual sign-in tracking.

Want to learn more?

For more information on how Location Reporting can help at tax time, sign-up to watch our latest webinar.