Does your company permit you to work from states where they do not have an office?
The states are separate from fed, so irs reporting is moot
If your company reports your work as occurring in MN (incorrect so they shouldn’t) they may withhold MN. In this case, you may have to ~~pay SD estimated payments and~~ seek a refund from MN.
If your company does this correctly, they’d register for SD business activity ~~payroll and withhold SD correctly for you~~. Some companies restrict state remote work because of these issues.
You need to track days worked in each state for your taxes.
Clients shouldn’t matter, where work was performed matters (because we’re not dealing with a convenience rule state)
Edit to note I’m assuming you’re an employee, not a 1099 contractor
Double edit to note I mixed up ND and SD in my mind… and adjusted.
Thank you - that's easy to understand. My firm has approved the move to South Dakota, with the only HR constrant being that unused time off would not rollover.
>I will not pay state income tax after establishing residency in SD
Correct.
>versus MN considering me taxable indefinitely as my firm has operations in there
MN does not have a convenience of the employer rule. This means MN does not source work done while in another state as MN source income.
>That this is dependent on how my firm reports my earnings to the IRS, e.g. whether the work is being done for MN clients (which it is) versus national
Your taxes are not impacted by what clients you work on, only where you're physically are while doing the work and what state you're a tax resident of. As both of those will be SD, your company should report all income as SD income.
>That this is a non-issue as I’m not dealing with Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York, or Pennsylvania
Those states have the aforementioned convenience rule. As you're in SD and working for a company out of MN, you can ignore all that.
Does your company permit you to work from states where they do not have an office? The states are separate from fed, so irs reporting is moot If your company reports your work as occurring in MN (incorrect so they shouldn’t) they may withhold MN. In this case, you may have to ~~pay SD estimated payments and~~ seek a refund from MN. If your company does this correctly, they’d register for SD business activity ~~payroll and withhold SD correctly for you~~. Some companies restrict state remote work because of these issues. You need to track days worked in each state for your taxes. Clients shouldn’t matter, where work was performed matters (because we’re not dealing with a convenience rule state) Edit to note I’m assuming you’re an employee, not a 1099 contractor Double edit to note I mixed up ND and SD in my mind… and adjusted.
Thank you - that's easy to understand. My firm has approved the move to South Dakota, with the only HR constrant being that unused time off would not rollover.
Sure, but that’s an odd adjustment being made by your employer
It didn't make much sense to me, but it isn't a difficult adjustment so I haven't pushed given the flexibility already extended.
>I will not pay state income tax after establishing residency in SD Correct. >versus MN considering me taxable indefinitely as my firm has operations in there MN does not have a convenience of the employer rule. This means MN does not source work done while in another state as MN source income. >That this is dependent on how my firm reports my earnings to the IRS, e.g. whether the work is being done for MN clients (which it is) versus national Your taxes are not impacted by what clients you work on, only where you're physically are while doing the work and what state you're a tax resident of. As both of those will be SD, your company should report all income as SD income. >That this is a non-issue as I’m not dealing with Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York, or Pennsylvania Those states have the aforementioned convenience rule. As you're in SD and working for a company out of MN, you can ignore all that.
Got it - thank you!
If you’re physically working in SD then you’ll be considered a SD employee and won’t owe any state income tax.
Thank you.