Tax Day is behind us, yay!

I’ve been enjoying a couple of quiet days and the ability to catch up with reading.

It’s been nice.

Before we move on from the 2019 tax season though, I wanted to share a quick tip with all of you who are expecting a refund.

The IRS’s Where’s My Refund page provides different resources to keep track of the state of your refund. These include:

  • The mobile app IRS2Go,
  • The IRS’ YouTube channel, which covers different refund related topics,
  • The Check My Refund Status tool

Those of you who filed your tax returns electronically should be able to obtain refund status information within 24 hours of filing. If you have filed on paper and mailed your tax returns, it will probably be weeks or potentially months before the IRS processes your tax return and your refund status is updated. The IRS still has a significant processing backlog of paper returns due to pandemic related disruptions. Paper tax returns are processed in the order received, and it could take months for the IRS to catch up.

Speaking of pandemic related disruptions, back in May when I finally got all my boys home, and I planned for the end of tax season, I had entertained the idea of taking a short vacation with the family in August. At the time, we were flattening the COVID curve, the summer heat was supposed to greatly reduce the incidence of the virus, and American projected C19 related deaths were revised down to 65,000. Things were looking up!

That was then.

Two months and 142,000 deaths later, this is what our curve looks like.

Not very flat. And far from improving.

Instead of planning for a vacation, I have instead started to plan for working from home for a really long time. Potentially another year or more. My children are supposed to head back to college in late August, but we are no longer sure that will happen either, so the entire family is planning to continue to share our home for work and remote learning purposes for the foreseeable future.

Working from home has several implications from a business point of view. Work days tend to be longer, about 10% to 20% longer; it is harder to compartmentalize personal time and professional time; relationships with co-workers can get weaker; communication clarity with colleagues and clients becomes more challenging; it can be especially stressful for families with young children.

One article published at The Harvard Business Review studied the implications of working without an office during the pandemic, and concluded that we have adapted remarkably well to the challenge of a sudden worldwide lockdown. Working from home has both advantages and disadvantages, and many white-collar workers, according to this study, seem to like it quite a bit and would like to continue to work from home in some manner after the pandemic subsides.

One thing this pandemic has demonstrated to those who were work-from-home skeptics, is that for most white-collar jobs, working from home is not only feasible, it can be achieved without much or any loss in productivity.

Always looking for the silver lining angle to any situation, I’m hopeful that this discovery will help me attain of my personal goals: becoming a location independent professional, who can choose to work closer to family, at any time, wherever in the world they may be.

Although the pandemic has been disproportionally challenging to certain segments of the population, which is heartbreaking and disappointing but unfortunately not surprising, and which has also impacted my personal priorities and goals, this does not diminish the fact that it has been challenging, to different extents, for all of us. Including you, reading this newsletter.

As I am sure you have been reflecting on your personal values and what matters most to you during this pandemic, what have you discovered about yourself and your priorities?

Have you found the silver lining for you?

Being able to work from home has more than just life planning and business productivity implications. It also has…..you guessed it…..tax consequences!

For those of us living in the USA, working from home may mean working in a different state from our normal office location. This can create state nexus issues, not just for us, the individuals working from home in a different state, but also for our employers, who may now have nexus in the state where we, their employees, are working from.  

At the employee level, the tax implications are likely limited to personal income tax. For employers, the implications may extend to income taxes, sales taxes, employment taxes, and maybe others.

For those of you living outside the USA, there may be international tax residency implications, for example, if you commuted to a neighboring country for work, and now you are working from home.  Or if you left your country of employment to work virtually from your home country. International tax residency issues may result in two countries considering you a tax resident at the same time, and this can potentially lead to double taxation.

Tax nexus and double taxation risks may be remedied by domestic tax law provisions, or there may be tax treaty provisions coming to the rescue. What is important, though, is to be aware that tax nexus issues are likely to result from changes in work locations, and to plan accordingly.

Minimizing adverse tax consequences or taking advantage of potential tax planning opportunities rarely happens accidentally. It normally requires awareness, intention, and advanced planning. If you think you may have tax nexus risks or opportunities, and are interested in learning more about these issues, these articles are good sources of additional information:

Accounting Today: State see employee telecommuting as a way of creating tax nexus amid coronavirus.

New York Times: When Sheltering in Place Puts Your Tax Strategy at Risk.

OECD Tackling Coronavirus: OECD Secretariat Analysis of Tax Treaties and the Impact of the COVID-19 crisis.

Bloomberg News: Super-Rich Stranded by Lockdowns Face Higher Tax Bills

And with this, we close the tax news for the week.