Withholding taxes when an employee temporarily works in another state

Q         An employee who resides in one state will be doing some temporary work in another state for about three months. Should we withhold his home state’s taxes for that period or the taxes of the state where he will be working?

The answer to this will depend upon the home and temporary work states’ laws regarding income tax withholding. This can vary greatly by state, with some states requiring income taxes to be withheld for any work performed within the state, others requiring income taxes to be withheld depending upon the length of time work is performed in the state, and other states’ laws are silent.

In addition, the home state’s laws may require the taxes to be withheld regardless of the location of the work if the employee continues to reside in and receive assignments from the home state. Or the home state’s laws may include a minimum length of time the employee must work in the other state before its taxes would no longer need to be withheld for that period. It’s recommended that a tax professional be consulted regarding the laws of the states at issue.

Martin J. Regimbal is a shareholder of the Kullman Firm in Columbus, Mississippi. He may be reached at mjr@kullmanlaw.com.