Financial losses that may result from moving to another state
If you have worked from home in the past six months, you may want to change your environment. Or maybe they are already interested in moving to another US state, suggests CNN.
If you do not need to be tied to the office, then you will prefer to be closer to the family (more babysitting). Or you want to move to a place where you can go hiking, surfing. Or maybe just move to a less crowded and cheaper corner of the United States.
In any case, if you are planning to move to another state or region, consider how this might affect your job, salary, taxes, and benefits. Before you call the movers, there are four important questions you should answer yourself.
Will the company allow work elsewhere?
Even if it's good to work with your company from home, that doesn't mean that home can be anywhere.
If you move to a location where your company does not have employees or additional offices, it may have to face a greater administrative and tax burden to fulfill its legal duties as an employer.
“Not all employers will want to allow employees to work out of state because that could mean additional commitment on their part,” said Kathy Brennan, knowledge advisor at the Society for Human Resource Management.
Or you might work for a company whose management just wants employees to return to the office as soon as it is safe to gather in large groups again. So, perhaps now he will not allow everyone to scatter around the country.
Will the move affect your salary?
“How much you get paid will depend in part on the cost of labor in the place where you choose to live,” explains Tosif Rahman, partner specializing in compensation strategies at HR consulting firm Mercer.
Therefore, if you move to a region where labor is cheaper, you may be paid less. And vice versa.
But if you have a job that is competitive at the national level and does not require a permanent residence in a particular location, the difference in your pay may be much less than you expect, Rahman added. The employer has to compete with companies all over the world for your services.
How will your benefits change?
Local and state laws govern many of the benefits provided by employers.
The biggest one is health insurance. You may have to switch to another plan if your current insurer does not offer coverage in the state you are moving to.
Or it may be that none of the insurance plans offered by your employer are available in your new state or region because the company does not do business there. This may mean that you need to switch to insurance through an exchange, or your employer may suggest another option.
Paid vacations can also change - for better or for worse depending on where you are going.
For example, California does not allow employers who offer paid leave or time off to impose a use-or-lose policy, as many states do. Here, these days are considered earnings, which can be accumulated and must be paid to you when you quit your job.
Alternatively, you may gain / lose the required minimum number of paid sick days depending on the jurisdiction you are moving to.
In addition, if there is any change in your salary when you move, the related contributions to your 401 (k) plan will also be affected, as they are based on a formula tied to your earnings.
How will the move affect your taxes?
This is the most difficult question. Consult an accountant or other qualified professional. Otherwise, you may face a large tax burden.
Most states have an income tax, and this tax is levied on income earned from work performed in the state. Find out if the current and new states have a mutual tax agreement - this means that if you work in one state but live in another, you will only owe income tax to one state. This is usually your “home” state. Otherwise, you may be in debt to both.
Seven states — Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York, and Pennsylvania — have an employer convenience rule.
“This rule stipulates that you must pay income tax wherever your company is located,” said Jared Walczak, vice president of government projects at the tax fund. "The state [of your employer] wants to tax you, but another state can tax you because you live and work there."
On the subject: Tax season 2021: changes to prepare for this year
And if you move from a high-tax state, like New York, to a place without a state income tax, like Florida, you can still pay income tax unless there is a mutual tax treaty or other arrangement. Therefore, first ask the payroll department how the deduction will change if you move.
“When you file your tax return and think you've been charged too much, ask for a refund. Make sure you have back-up documentation of your place of work to support your opinion in the event of an audit, ”advises Cosimo Zavaglia, Tax Partner at Morgan Lewis.
Such documents may include a calendar or travel records. And if your company is in an employer-friendly state, you may need documents from your employer stating that your place of work is no longer where the company is based.
“Know the rules of the states you are dealing with,” Zavalya is convinced. "This is the best advice to protect yourself."
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