In what state do I need to register for taxes if I have out of state employees?

Claire Baker
May 23
2 min read

Goody, goody gumdrops! You know what time of year it almost-is?

Do you?

Do you??

That’s right! It’s TAX SEASON!

The only time of year when you REALLY want to talk to your CPA.

And the only time of year when they won’t return our calls.

This year, as you wallow in anxiety waiting for the tax team to get back to you, I have a fun project for you.

Make sure your state payroll tax settings are correct.

This is the only time when it DOESN’T feel irrelevant and boring. So Take advantage of it.

🏢 State Unemployment (SUI) = Where the werk gets werked

☑️ If they work in an office

Unemployment state = office state

☑️ If they work from home

Unemployment state = home state

☑️ If you’re not sure

Unemployment state = where their biggest monitor is set up

🏠 Income Tax (SIT) = Where they live, sorta

☑️ If they work from home

Income tax = home state

☑️ If they work in an office

Income tax = home state

if office state income tax > home state income tax

Income tax = home state + office state

Unless the home and office state have reciprocity.

Then income tax = home state as if they worked remotely

☑️ If the company is headquartered in NY

Taxes in NY always.

It makes no sense. Pony up. Fuggeddaboutit.

🍼 Check for Paid Family Leave (PFL)

☑️ If the SUI state is any of these, make sure you’re paying PFL:

CA, CO, CT, DE, ME, MA, MN, NJ, OR, RI, WA, DC

☑️ If they’re in NY or HI, make sure you have a private plan that meets the statutory requirements.

🌳 Check for local taxes

☑️ Check every single person who lives in:

PA, IN, OH, KY, MD, CO, DE

just in case

☑️ Also check:

NYC, Portland (OR), Detroit, Lansing, Grand Rapids, St Louis, Kansas City

🤕 Don't forget about Worker's Comp

Washington, Ohio, and Wyoming are monopolistic states, which just means that worker's comp is a tax rather than a private policy. Don't forget to enroll.

Also, if you're in New York, don't ever, ever, EVER let your worker's comp lapse. The penalties for being uncovered are more than a whole year's worth of premiums.