Someday we will hopefully reach a point where discussing tax matters won’t just involve things that happened (or happened more) during the pandemic.
But we are not there yet.
So today I wanted to write a little bit about location. This really stood out last year as more people worked from home. And that home was not always in the same state as where they used to work. That changed how many had to pay and file taxes.
And now this year, many people are still doing so, some others are joining the work-at-home forces for the first time, others who could not travel for a time are working in new areas, and all these situations could raise new questions.
These issues came back into my view through a recent Accounting Today article that covers a lot of these situations for mobile entertainers. I don’t have the space to go as in depth here but wanted to put out a couple key points for those who may be affected.
The biggest one of these is to just keep records of what you are doing and where you are doing it. You are not going to be able to look back at a year of transactions and payments if you are working in various areas and specifically recall where each happened.
This is also good practice for people who may not be setting up shop in different areas but travel for work. The better your record keeping when on trips, the more you will be properly tracking your potential deductions and keeping yourself from missing any expenses.
In addition to record keeping, though, I also want to stress the important of planning. So often in situations like this, where someone may be working in a new state, they understand that there could be tax implications, but tend to push that idea away and plan to deal with it when tax filing comes. Of course, this could lead to a nasty surprise if you did not set things up correctly, owe more money than you realized, and hit yourself with a surprise, large bill. At the same time, though, maybe you’ll be paying way more than you would have had to and could have been using that money that was being withheld to do something different along the way. Either way, planning would have prevented the situation.
So be aware and be active in addressing your situation. After all, in a time that has upended a lot of our lives, the more we have control over, the better we feel.
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