Mobile Workforce Tax Relief Bill Could Benefit Those Working in Multiple States

Working in multiple states is always confusing when it comes to taxes. Employers must figure out how much to withhold in taxes, employees must figure out state filing requirements, and the results are different for every state.

In an effort to simplify this process, the House of Representatives recently passed the “Mobile Workforce State Income Tax Simplification Act of 2011”. This bill, which is being sent to the Senate, would establish a uniform requirement that non-residents would have to work in a state for more than 30 days before becoming subject to out-of-state income taxes.

This legislation would reduce the amount of resources businesses expend on calculating the proper withholding for each state that applies to their traveling employees.

Although this would provide tax simplification, the states would still remain free to set any income tax rate they choose. If the bill passes, reporting requirements would simplify for both businesses and their employees.