With today’s technology, many businesses have allowed employees to work remotely from home or even from other states. But many probably have not considered the potential tax implications.

If you allow or are thinking of allowing employees to telecommute, be aware that your company can become exposed to various nexus tax liabilities as it relates to the state where business is being conducted, including:

  • State income
  • Sales and use
  • Franchise
  • Withholding
  • Unemployment

Additionally, the employee needs to be aware they might be subject to double taxation if both states attempt to tax his or her income.

The rules vary by state and also by type of tax — and become even more complicated for international telecommuters. So it’s a good idea to review the rules before you approve a cross-border telecommuting arrangement.

To determine how allowing your employees to telecommute will impact your tax liability, contact Doeren Mayhew, with international and state and local tax advisors in Michigan, Houston and Ft. Lauderdale.