I’m really surprised that nobody has set up address as a service yet so that you can claim for example to live in New York by virtue of an address auto command “a New York salary”.
Cities definitely don’t have the resources to track you down and I’m not sure employers especially larger ones have any mechanisms in place to keep track. I’m not advocating for this just surprised it’s not more well known. Though I suspect it’s common and just not talked about much for obvious reasons. Certainly there are also jobs that require you to physically work from a given state as well for example.
How do so called digital nomads handle it from a tax perspective? Do they maintain a residence for tax purposes? Is that any different?
What makes it more problematic is that it's not just tax offices that would be interested in finding out. The company you work at may also get in trouble with the tax office as they pay employment taxes too, so they are probably interested in the fact that you're deceiving them. If your manager suspects you're not being truthful and follows up with HR this could easily get you in trouble. As remote work becomes more popular, it becomes more likely that companies will pay attention to this.
Knowing all of that, I'd find it quite hard to justify playing these games. It just seems like asking for trouble, with a pretty good chance of getting it.
For example, it's de facto not illegal to drive 5mph over the speed limit on the highway. No police officer will pull you over for that unless they have some other prior reason. So in that sense, lack of enforcement has made the practice legal.
You can, for example, get employed at 10 companies and then outsource all the work (someone got caught doing it and it was in the news).
If you want to cheat, you can, but you probably should not be discussing it on hacker news.
They probably have a "permanent address" at a friend's house or through some service. And it's probably technically fraud. That said, the US is not really setup for citizens not to have a permanent address in one state--even if just for things like driver's licenses. You can do things by the books for tax purposes but I suspect a lot of people moving around don't.
https://www.annuity.org/personal-finance/taxes/residency-req...
Ultimately it comes down laws, regulations and taxes. Company wants to make it easy for itself to deal with that.
You can just say plans changed and you moved in the case of an audit. You could tell your employer the same thing. Much harder to dock someone's salary once they've started working.
California FTB very much cares if you are collecting SV salary but are not paying CA taxes by living in LCOL areas. Unless you are a CPA, please do not spread lies.
https://www.americanbar.org/groups/business_law/publications...
If the reason is bullshit, there's no need to bullshit back.
If the reason isn't bullshit (e.g. coz they want you in their Manhattan office on a moment's notice) then having a virtual address won't help.
which means you're a contractor, rather than an employee. I do think this is a better way tbh, as you can potentially own all of your healthcare costs, and optimize your taxes properly. And you can probably charge a lot more as a contractor, to make up for the lack of job security etc.
It is a poor reflection of our tax system that running your own entity that you then pay yourself out of can have lower taxes than simply earning money as an employee.
In the city where I currently live, lots of small businesses try to claim that their employees are contractors. Those businesses depend on the ignorance of their workers.
In France, companies also like to contract out a lot, either to "freelance" or regular outsourcing shops.
The reason I put freelance in quotes is that there's no such thing here, legally. You have to have some form of company, through which you invoice the client.
But then, whenever you want to get the money out of the company to pay rent and eat, you'll be hit by, more or less, the same taxes the employer would pay. For a given unit of work, it's not cheaper to contract out, there's no real tax loophole.
As far as I know, the state doesn't really care. It may even prefer it, since contractor rates are usually higher than salaries, so they get to get more tax.
The only situation where it would crack down on this is if the would-be employee complained. Since this is considered a "precarious" arrangement, if the contractor can prove that they're basically an outsourced employee, they can ask to be converted to an actual employee and the state will back them up.
However, depending on what you do, people can end up paying less in taxes overall as a contractor because you have more flexibility for deductions. There are very little options for an employee to deduct any expenses in the US, whereas, a contractor could potentially deduct the cost to commute to an office, their cellphone and home internet (if used for work) and even a portion of their rent/mortgage for a home office.
You know the old saying, noting is certain except death, and the will of the department of taxation for the state of (California|New York).
WA has no state income tax, but a beefier payroll tax, so it's cheaper for me but more expensive for the company.