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When it comes to taxes, being tracked can be a good thing.


This article is part of our new series, The streams, Which examines how fast forwarders in technology are changing our lives.

Two months ago, Jeff Shue, a private equity executive, moved from San Francisco, where he lived in Summerlin, a suburb of Las Vegas, for 20 years. During the time of the epidemic, she felt she no longer needed to live in a city where property was expensive, taxes were high, and the quality of her life, now married to a young child, changed. Went .

And with available vaccinations and resuming business travel, he can stay anywhere as long as he can board a plane for work.

“I love California, but over time the cost of living became very high,” said Mr. Shea, who was born and raised in that state and went to the University of California, Berkeley. “I split up from California.”

A very common goal is to move out of a city for more space in the suburbs. This often marks a maturity point for Americans with young children, who value well-regarded schools on a nightlife scene.

But Mr. Xi was left the state and was highly compensated by his work, worrying that his departure would not come easily. As the managing director of a private equity firm, he is a really high earner who does not want to lose California. When people move into their tax bracket, the state is likely to audit them to make sure they have actually left.

With the tax filing deadline expiring on May 17, people who have moved to another state or are working more remotely need to be extra vigilant with their tax documents. For Mr. Xi, which includes an app on his smartphone that uses location services to track them all the time. What he is sacrificing in secrecy is gaining in peace of mind, knowing when and where he will show up in a particular state, should the California tax authority come after him.

Tax-affected states are not happy to see any big taxpayers leave. Enter the need to track carefully where you are at all times.

“As part of Xi, there is a list of things like changing his voter registration,” Mr. Shetu told Atlanta (the last 36 hours in Tampa, Fla., And Philadelphia, when he was traveling). For work). “Then your days are on track. You can use Excel, but if I get a check from the tax board, it’s just in Excel. They could argue that I did something rough. But I am never separate from my phone. It seems like a very unavoidable way to track me where I am. “

Tax apps like Taxbird – which Mr. Xi uses – and Taxade and Moneo were created years ago with a different purpose in mind: broadly affluent retirees to avoid the burden of tax when they are high-tax Returned to his second home in the state. But ever since the epidemic has sent people home, and in the process freed them from being in an office, these apps have become relevant to professionals who want to work wherever they want to live.

These apps work on the subscription model and they cost quite a bit. For example, the taxbird costs $ 34.99 per year. After a free 90-day trial, TaxDay charges users $ 9.99 per month. Monao is geared more towards high earners and offers more options for its service, charging $ 99 per month or $ 999 per month.

Jonathan Mariner, founder and president of TaxDay, said, “We have seen a fourfold increase in our app over the past year with no ads that were audited themselves while working for Major League Baseball in New York but live in Florida . “When people are concerned about privacy, I say that you probably have a dozen apps on your phone that are tracking you, and you don’t even need to.”

Those who use the apps understand that their location will be tracked, and the apps acknowledge in their privacy policy statements what the data is and has not been used. Monayo makes it a point to describe how the data is listed – city, state, and country, but without specific locations. It also states that it does not share any data. (All three apps are cautious about this.)

While each tax app has a different level of accuracy and uploading supporting documents, they all meet the basic requirement of proving your location to the tax authority. When it comes time to file taxes, users download the details where they worked with degrees of specificity, from a simple day count to more detailed location information.

“In the past year, it has become a controversial issue among states,” said Chester Spat, a professor of finance at the Taper School of Business at Carnegie Mellon University. “The question is, what does it mean for your employment to be in another state in the virtual world? In the physical office world, it was easy. “

With millions of dollars at stake, states in need of revenue do not let the money go without a fight. Tax partner Dustin Grizzle of the accounting firm MGO said, “There can be as much wrong with it as you can implement it.” “States are going to say, ‘Hey you’re using Kovid so you can work remotely.”

One thing is clear: The epidemic has, in fact, increased this type of tax debate for middle-income earners who would like to live elsewhere. At the center of the debate is a magic number: 183 days – half of the year, plus one day – which is the highest amount of time that determines whether a person has gone elsewhere for tax purposes. (Exceptions are: Ohio only requires residents to stay out of state for five months.)

Residency, however, is something to declare to you; This is not something you can establish by traveling. For many workers, the issue will be where their employer states that their office is.

David R. Cohen, a lawyer who focuses on complex lawsuits, had been traveling from his home in Ohio for decades. During the epidemic, he moved to Naples, Fla., With his wife. I rented a place and realized there was no reason to go back to Cleveland in the winter. After renting, he bought a house in Naples a few months ago.

“Kovid proves that everyone can work remotely,” Mr. Cohen, who uses taxbirds. “It was at that point that I started thinking about residency here.”

His impetus went beyond the seasons: he argued that most of his cases involved multiple courts, so he was either traveling or working outside his home.

That kind of shift Some states are worried. There is currently a tax dispute between New Hampshire and Massachusetts that may end up before the Supreme Court. Central Question: Where people are working for tax purposes, they are not allowed to go to office in any other state?

When the epidemic began, Massachusetts issued guidance stating that if you normally work in an office in that state, you would have to continue paying income tax there, even if you were working from home. New Hampshire challenged it File a lawsuit.

“There is a strong argument that the epidemic should change things,” said Eric Bronenkant, head of foremost Adding Tax, financial advisor App. “But one of the things I’m worried about is that if the Supreme Court comes down on behalf of Massachusetts, other states will say that the Supreme Court has given its approval. That makes remote-workers taxation more complicated. Will go. “



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