--- title: When Employees Cross State Lines description: Do you have employees who live in one state and work in another? Here is what you need to know about classifying wages and avoiding penalties. image: https://blog.paydaypayroll.com/hubfs/Imported_Blog_Media/When-Employees-Cross-State-Lines.png --- Industry News, Payroll, Administrative # When Employees Cross State Lines January 24, 2020 Do you have employees who live in one state and work in another? You may run into this if: - Your company is located near a state border. - You have employees who travel to job sites in other states. - You have employees who work remotely. - You are expanding into new states. Having some basic understanding of what happens will help you make the right decisions about classifying wages and avoiding penalties or amended filings later. Both state unemployment and withholding taxes should generally be paid to the employee's work state, but there are exceptions; the twist is that state laws are quite literally all over the map. You may want to be familiar with the state legislation that applies to your team. Here are the basics.   ## Reciprocity agreements Some states that border each other have entered into agreements related to allowing employees who live in one state but work in another, to have their withholding tax paid to the work state. For example, an employee who lives in Maryland but commutes to northern Virginia or D.C. for a job can have withholding tax paid to Maryland rather than the work state. This is also known as courtesy withholding, and it means the employee can file one tax return each year, which helps simplify things. Have your employee complete a non-residency certificate to excuse him/her from tax withholding in the work state. Let your payroll provider know that your employee has an agreement in place. If there's no reciprocal agreement, your employee will most likely have to pay both nonresident and resident state income tax. But luckily, most states grant a tax credit to cover the cost of being taxed twice. Each state may have its own twist on taxation, so it's best to check the local situation and not make any assumptions. The unemployment tax situation is usually straightforward. When an employee is working in multiple states or working remotely for a company based in another state, you withhold state unemployment tax only in the state in which the employee is working.   ## When it gets complicated Today's remote-work world means situations that were rare or unheard of a generation ago are now commonplace. That means more tax complexity. For example, consider an employee who works from his log cabin in upstate New York, but your company is located in Atlanta — you'll have to pay all state taxes to New York because that's where the work is actually being completed. Or at that same Atlanta company, you have an employee who needs to work in Maine temporarily for three months. For nine months, you pay taxes in Georgia, and for three months, you pay taxes in the Pine Tree State. Most of this information is general. It can get complicated, and there are exceptions and special circumstances. Be sure to [let us know](https://blog.paydaypayroll.com/contact/) if you have a cross-border workforce, and we'll [help you organize your tax system accordingly](https://blog.paydaypayroll.com/payroll/). - Share This - [**](https://www.facebook.com/sharer/sharer.php?u=https://blog.paydaypayroll.com/when-employees-cross-state-lines) - [**](https://twitter.com/intent/tweet?text=&url=https://blog.paydaypayroll.com/when-employees-cross-state-lines) - [**](https://www.linkedin.com/shareArticle?mini=true&url=https://blog.paydaypayroll.com/when-employees-cross-state-lines&title=&summary=) Related ### News, Insights and Updates [Read the Blog](https://blog.paydaypayroll.com/) [ Data-Driven Payroll and HR: Driving Business Success in 2025 December 17, 2024 ](https://blog.paydaypayroll.com/data-driven-payroll-and-hr) [ Payroll in 2025: Navigating New Regulations and Workforce Expectations December 10, 2024 ](https://blog.paydaypayroll.com/payroll-in-2025) [ Holiday Payroll Schedules: How to Avoid Delays and Ensure Timely Payments November 19, 2024 ](https://blog.paydaypayroll.com/holiday-payroll-schedules) [ Preparing for Year-End Payroll: Essential Tips for a Smooth Process November 07, 2024 ](https://blog.paydaypayroll.com/preparing-for-year-end-payroll) [ Maximizing ROI: The Financial Advantages of Integrating Employee Benefits with Payroll September 26, 2024 ](https://blog.paydaypayroll.com/maximizing-roi-the-financial-advantages-of-integrating-employee-benefits-with-payroll) [ Creating an Effective Payroll Training Program August 05, 2024 ](https://blog.paydaypayroll.com/effective-payroll-training-program) [ Importance of Payroll Training for HR Teams July 23, 2024 ](https://blog.paydaypayroll.com/payroll-training-for-hr-teams) [ Master Summer Hiring with Smart Payroll Tactics June 25, 2024 ](https://blog.paydaypayroll.com/master-summer-hiring) [ Avoid Payroll Pitfalls: Managing Time and Attendance in a Summer Workforce June 11, 2024 ](https://blog.paydaypayroll.com/avoid-payroll-pitfalls-managing-time-and-attendance-in-a-summer-workforce) [ Maximizing Workforce Commitment: The Role of Payroll and HR Software in Hospitality April 23, 2024 ](https://blog.paydaypayroll.com/maximizing-workforce-commitment-the-role-of-payroll-and-hr-software-in-hospitality) [ Navigating Seasonal Peaks: The Power of Payroll and HR Systems in Sustaining Commitment April 11, 2024 ](https://blog.paydaypayroll.com/navigating-seasonal-peaks-the-power-of-payroll-and-hr-systems-in-sustaining-commitment) [ Unlocking Potential: Transforming Seasonal Workforces with Payroll and HR Software April 02, 2024 ](https://blog.paydaypayroll.com/unlocking-potential-transforming-seasonal-workforces-with-payroll-and-hr-software) [ 4 Major Payroll Tax Changes to Expect in 2024 + Checklist March 19, 2024 ](https://blog.paydaypayroll.com/4-major-payroll-tax-changes-to-expect-in-2024-checklist) [ Tax Tip: Managing Payroll Taxes for Employee Compensation March 18, 2024 ](https://blog.paydaypayroll.com/tax-tip-managing-payroll-taxes-for-employee-compensation) [ Understanding the Impact of Donor Restrictions on Non-Profit Payroll Management February 07, 2024 ](https://blog.paydaypayroll.com/understanding-the-impact-of-donor-restrictions-on-non-profit-payroll-management) [ Leveraging Technology for Non-Profit Payroll: A Guide to Cost-Effective Solutions January 31, 2024 ](https://blog.paydaypayroll.com/leveraging-technology-for-non-profit-payroll-a-guide-to-cost-effective-solutions) [ Navigating the Updated Overtime Rules: A Compliance Guide for Employers January 24, 2024 ](https://blog.paydaypayroll.com/navigating-the-updated-overtime-rules-a-compliance-guide-for-employers) [ Streamlining Certified Payroll for Compliance and Efficiency January 09, 2024 ](https://blog.paydaypayroll.com/streamlining-certified-payroll-for-compliance-and-efficiency) [ Payroll and Compliance for Non-Profits, What to Know January 02, 2024 ](https://blog.paydaypayroll.com/payroll-and-compliance-for-non-profits-what-to-know) [ Upcoming Payroll and Compliance Changes for 2024 December 27, 2023 ](https://blog.paydaypayroll.com/upcoming-payroll-and-compliance-changes-for-2024) Get Started ## Let's make today the day. 1. 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