Massachusetts adopts COVID-19 withholding sourcing rules for telecommuting employees
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Tuesday, April 28, 2020

Massachusetts adopts COVID-19 withholding sourcing rules for telecommuting employees

By Payroll and Entitlements Editorial Staff

Massachusetts adopted sourcing rules for personal income tax withholding from employees who telecommute during the COVID-19, or coronavirus, pandemic.

Nonresidents. Employers must source compensation to Massachusetts, and withhold income tax, for personal services performed by a nonresident:

  • who, immediately before the Massachusetts COVID-19 emergency, was an employee engaged in performing those services in the state; and
  • who during the emergency is performing those services from a location outside the state.

Residents. A resident working in Massachusetts during the emergency can claim a credit for income taxes paid to another state due to that state’s sourcing rules. Massachusetts also will not require withholding from the employer if it must withhold income tax for the employee in the other state. (830 CMR 62.5A.3, Massachusetts Department of Revenue, effective April 21, 2020).

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