As the curtain begins to lift on the world of travel after a long year of confinement, Paul and I are thinking about our poker pilgrimage. As we mentioned in our recent pilgrimage update, we are itching to get back on the road. One of the issues that we have started researching is the tax implications of mobile work. The topic of state income taxes for poker nomads (any digital nomad, really) is complicated. Rules vary from state to state and are changing all the time.
NOTE: We are not tax experts, accountants, lawyers, or professionals with any official skills in tax matters. We are merely reporting information gathered from other resources. We strongly advise you to confirm the tax situation for states you plan to visit with your tax professional. The details included here concerning state income taxes for poker nomads are as accurate as we can find for March 2021. We will update this post if we learn about any notable changes, but buyer beware.
Okay, with that out of the way, what are the implications of working from the road for state income taxes?
State Income Taxes for Poker Pilgrims
The overarching rule is that there is no rule. State income tax liability and filing responsibilities vary widely by the state you are in when you conduct the work. Whether you need to officially file state income taxes in one state or in 13 depends upon where you work and how long you work there in a given year. While some states don’t impose any state income tax, others require you to file for the first day of work. Yep, you read that right. Theoretically, for example, say you visit Massachusetts for a single day and take a work-related conference call. At the end of the year, you are required to declare that one hour of income and file taxes in the state of Massachusetts.
Now, I will tell you that you do not have to PAY taxes in both Massachusetts and your home state, but you are supposed to file in Massachusetts for the hour worked there. You would then pay Massachusetts taxes for that hour and let your home state know that you have done so. Your home state will then give you a waiver so you don’t have to pay THEM for that hour you worked in Massachusetts that year. Insanity you say? I agree.
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State Income Tax Reciprocity
Some states have reciprocity agreements with neighboring states. If you live in one state but work in a state with reciprocity, you only need to file state income taxes where you live. Sixteen states plus Washington DC have such agreements. These states can be found here, along with reciprocity details.
Of course, you’d have to be on a mighty short poker pilgrimage to stick to neighboring states.The popular poker states of Nevada, Florida, Texas and New Hampshire are income-tax-free, relieving you from the concern of filing state income taxes thereinClick To Tweet
States With A First Day Rule
Twenty-four states impose the dreaded “First Day” rule requiring filing of state income taxes for work done for only one day. These states include most of the Northeast and much of the Midwest. The smart poker nomad will avoid working in these states if at all possible.
States Without Income Tax
At the other end of the spectrum are the income-tax-free states. Work done in the nine states that do not impose income tax can be reported on your home state taxes. Hassle averted. Notably for poker nomads, some of the best states to play poker are income-tax-free states. These include Nevada, Florida, Texas, and New Hampshire.
States that Fall Somewhere In Between
Falling in between the restrictive First Day states and those that are fully income-tax-free (remember, you still have to pay your home state when working in these states!) are a collection of states that allow somewhere between two and over 30 days of work before income taxes need to be filed. Some of these states additionally have an income amount tied to this filing requirement.
Maine, for example, requires you to file a state income tax return if you work there for more than 12 days and earn more than $3,000 of income “from all Maine sources”. California (another big poker state) is one of these in-between states. However, combing through their tax code and through multiple articles written on temporary work by non-residents, the rules that apply to California are about as clear as mud. I recommend seeking advice from a tax professional before any extended working stay in California.
This fabulous map can be found on the website of The Mobile Workforce Coalition, which is striving to simplify tax codes for non-resident workers country-wide. We strongly recommend this website as a resource when determining which states will require you to file state income taxes for poker nomads.
Summary of State Income Taxes for Poker Nomads
As you can see, trying to figure out whether you need to file state income taxes in the states you may pass through as a poker nomad is not easy. However, we have identified some clear guidelines:
- Wherever you travel, you will need to file income taxes in your home state for ALL income earned that year, regardless of where you earned it.
- The popular poker states of Nevada, Florida, Texas, and New Hampshire are income tax free, relieving you from the concern of filing state income taxes therein.
- Avoid doing work while passing through First Day states. If you must work within their borders, prepare to file taxes in the state.
- California is an enigma. Consult your tax professional if you find yourself planning a poker trip through California.
- Really, consult your tax professional whenever you plan to work out of your home state. Better safe than sorry.
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