Understanding Remote Work Tax Implications in Boston

Remote work has become the new normal, but many remote employees and their employers are unaware of the tax complexities that come with it especially in a state like Massachusetts. Whether you’re a Boston resident working for a company in another state or a non-resident working from Boston, it’s important to understand how your work location can affect your tax situation.

Key Tax Implications for Remote Workers in Boston

1. Massachusetts Taxes Resident Income
   If you live in Massachusetts, all your income is subject to state taxes, no matter where your employer is located.
2. Non-Residents Working from Boston
   Even if you’re not a Massachusetts resident, income earned while physically working in Boston may be taxable in the state.
3. Employer Withholding Must Reflect Actual Work Location
   Employers are required to withhold Massachusetts state income tax if the employee is working in the state, even remotely.
4. No City Income Tax in Boston
   Boston doesn’t charge city income tax, but you still need to file state returns.
5. Cross-State Work Increases Complexity
   You may need to file tax returns in both Massachusetts and the employer’s home state. Tax credits may help avoid double taxation, but rules vary by state.
6. Home Office Deduction Is Limited
   W-2 employees generally do not qualify for the federal home office deduction, but self-employed individuals may.
7. Good Recordkeeping is Essential
   Track your work location, keep receipts for expenses, and maintain accurate records of all tax documents.

Common Remote Work Tax Mistakes

• Assuming out-of-state employers handle everything
  Many employees think their employer is automatically managing state tax compliance which is not always true.
• Failing to update your work address with HR
  This can result in the wrong state taxes being withheld.
• Overlooking multi-state tax obligations
  If you travel frequently or work across state lines, you may be liable for taxes in more than one state.
• Missing out on deductions for self-employment
  Freelancers and contractors often forget to claim eligible deductions, leaving money on the table.

Quick Case Study: Amanda, Remote Designer in Boston

Amanda is a Massachusetts resident who started working remotely for a New York-based design firm in 2022. Her employer continued withholding New York taxes, unaware she’d moved back to Boston permanently.

Come tax season, Amanda discovered she was taxed by both states, but hadn’t filed correctly in Massachusetts. After consulting with a tax professional, she amended her returns, received a partial refund from New York, and updated her payroll information to reflect her Boston residency.

Lesson: A quick tax consultation could have saved her both time and stress.

Conclusion

Remote work opens up new possibilities but it also creates tax challenges that shouldn’t be ignored. If you’re unsure how your work-from-home arrangement affects your tax situation, it’s best to get ahead of it now.

If you need assistance navigating your tax obligations while working remotely in Boston, contact us for expert advice tailored to your needs.