As remote and hybrid work solidify into standard practice, CPAs are facing increasingly complex tax issues this fall. State nexus, payroll withholding, interstate residency rules, and limited home‐office deductions are among the many pitfalls. In this blog, we’ll walk through what’s changed or becoming more important in remote work tax implications, and how using an AI tax research & planning tool like Hive Tax can help you stay ahead, speed up analysis, and reduce risk. Click through to learn proactive strategies and tech‐enabled workflows you should be using before this tax season hits full swing.
1. The Current Landscape for Remote Work Taxation (Fall 2025)
Several developments make this fall particularly important for CPAs:
- Remote and hybrid work continues to persist well beyond pandemic-era emergency rules. Employers have remote employees in multiple states, or even workers moving part‐time across state lines.
- State and local tax (SALT) authorities are sharpening enforcement of nexus (both physical and economic). A remote worker in a state can trigger income tax, payroll tax, unemployment insurance, and other obligations for the employer.
- Some states continue to use or uphold the “convenience of the employer” rule, which can require remote workers to pay income tax to the state where the employer is located—even if the employee works from their home state purely for convenience. New York remains a prime example.
- Home office deductions remain limited for employees (W-2), since the Tax Cuts and Jobs Act of 2017 removed most unreimbursed employee business expense deductions at the federal level. However, self‐employed persons and some state rules offer more leeway.
2. Key Tax Issues CPAs Should Be Focusing On
Here are the main areas that clients and firms need to address carefully:
| Issue | What to Watch For | Implications |
| State Income Tax Withholding | Remote employees working in states that require withholding based on physical location. If client has employees living or performing work in different states, check registration & withholding obligations. | Mistakes lead to back taxes, interest, penalties. Also costly from compliance burden. |
| State / Local Nexus for Businesses | Firms may inadvertently create nexus simply via remote employees. Nexus triggers may include payroll, property, economic presence. | Once nexus, extra filings, income apportionment, possibly state corporate taxes, local taxes, and sales/use tax obligations. |
| Residency, Dual State Filings, Reciprocity | Where employees live vs. where they work. Some states have reciprocity agreements or rules for nonresident withholding; others have strict definitions. | Employees may owe tax in more than one state; exposes firm to advising risk, and employees may have surprises at year‐end. |
| Home Office & Employee Expense Deductions | W-2 employees have very limited ability at the federal level; states may diverge. Self-employed/exempt persons may deduct under regular/exclusive use. Documentation matters. | Missed deductions are lost savings; misclaims risk audits or adjustments. |
| Payroll / Unemployment / Local Taxes | Unemployment insurance, workers’ compensation, local taxes (city, county) may be affected by where work is being physically performed. | Liability for employer if not compliant; complexity when workforce is distributed. |
3. What’s New or Changing: Trends & Risks
- Greater State Enforcement – As remote work becomes normalized, states are more actively auditing multistate employer withholding and nexus issues.
- “Convenience of the Employer” Under Scrutiny – Cases like recent NY appeals show that remote workers may still face taxation from employers’ states. CPAs must advise clients carefully about implications.
- Increased Mobility & Hybrid Schedules – Employees who split time in several states expose employers to multiple state rules, adding complexity to payroll and income tax withholding.
- State‐by‐State Divergence – Because there’s no uniform standard, the patchwork of reciprocity, withholding rules, home office allowances, and nexus thresholds is increasingly hard to navigate.
4. Best Practices & Planning Strategies for CPAs
To deliver value and avoid liabilities, here are recommended approaches:
- Conduct Multistate Nexus Reviews
Regularly map where clients have remote employees (or even contractors) working, where revenue comes from, and where physical or economic presence may trigger nexus. Use checklists or frameworks. - Track Employee Work Locations Rigorously
Encourage or require employees to log where they work (dates, state), especially during relocations or hybrid schedules. Technology (time/location tools) helps. - Review Employer Withholding & Payroll Policies
Update policies to accurately withhold for the correct states. For remote hires, ensure registrations in states are up to date. - Document Remote Work Agreements / Contracts
Clarify in employment or contractor contracts where work is to be done, expectations, reimbursement of expenses, liability for taxes. - Educate Employees & Stakeholders
Employees may be unaware of dual filing, withholding obligations, or local tax liabilities. Build awareness to avoid surprises. - Monitor State Law Changes Closely
Before this fall’s filing season, check for new state statutes, case law (e.g. appeals tribunals), or administrative rulings in key states where clients operate.
5. How AI Research & Planning Tools (like Hive Tax) Help CPAs Move Faster and Smarter
Leveraging modern tools gives CPAs an edge in this increasingly complex environment. Here’s how Hive Tax (or similar AI-powered tax research & planning platforms) can help:
- Automated Research Summaries: Pull together the latest rulings, state guidance, reciprocity status, nexus thresholds for particular states. Rather than manually scanning dozens of state legislatures/regulations, AI tools can surface relevant updates.
- Scenario Modeling & What-If Analysis: For example, if a client has employees splitting time between State A & B, Hive Tax can help project how changing location or residency will affect tax liability, withholding needs, and nexus exposure.
- Consistency & Risk Mitigation: Tools help maintain consistent application of rules across clients. Documentation of research steps, flags for risk (states with “convenience rules,” states where employee resides but works from another place) helps reduce misstatements or noncompliance.
- Time Savings in Planning & Client Advisory: Instead of spending hours per state per client, CPAs can use AI tools to prepare advisory memos, deliverables for planning discussions, or even internal checklists, accelerating service delivery.
Summary
Remote and hybrid work is no longer a temporary adjustment—it’s here to stay. For CPAs heading into this fall tax season, staying ahead on remote work tax implications is essential. These include multi-state withholding, nexus exposure, dual filings, limited deduction opportunities, and increased scrutiny in states with special rules.
Using powerful AI tax research & planning tools (like Hive Tax) lets you move more quickly, reduce risk, provide sharper advice, and deliver more value to your clients.
Next Steps: Evaluate your clients’ remote workforce footprint. Run nexus and state‐withholding audits. Incorporate AI-powered tax tool your workflow. If you haven’t already, book a demo or trial of Hive Tax to see how these features (scenario planning, research summaries, nexus monitoring) could fit into your practice.