The rise of remote work has created massive tax complications for both employees and business owners. If your company is headquartered in New York, but you spent six months working from a rental in Florida and three months in Texas, you may have just triggered a multi-state tax nightmare.
In the tax world, "nexus" refers to the minimum connection a taxpayer must have with a state before that state can legally tax their income. For decades, nexus meant having a physical office or a warehouse. Today, simply having an employee open a laptop and work from a kitchen table in a new state can trigger tax nexus for the entire company.
If you trigger nexus, you (and your business) may be required to file apportioned state tax returns, pay local gross receipts taxes, and register for payroll withholding in that new state.
Certain states (most notably New York, Pennsylvania, and Nebraska) aggressively enforce the "Convenience of the Employer" rule. Under this rule, if you work remotely in a different state simply because it is convenient for you (and not because your employer explicitly required you to do so), your home state will still tax 100% of your income.
If the state you are physically sitting in also decides to tax that income, you face double taxation. While states generally offer a credit for taxes paid to other jurisdictions, the math is incredibly complex and requires expertly filing a resident and a non-resident tax return.