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Category: Tax planning

Doing Your Taxes as a Remote Worker

Posted on by Hillary Mitchell

Taxes for remote workers can be complex, varying based on factors including where you live, where your employer is located, and whether you work across state or country lines.

Which states do you pay taxes to when you work remotely?  

When you work remotely, the states where you may owe taxes depend on where you live and where your employer is based. Here are the most common tax scenarios: 

Living and working in the same state as your employer.

  • You only owe state taxes in your home state.
  • Example: You live and work in California, and your employer is also in California—your taxes are straightforward, and you only pay California state taxes.

Living in one state and working for an employer in another state.

This is where things get complicated. You may have to file taxes in both states depending on: 

  • Reciprocity Agreements: Some neighboring states (like Illinois and Indiana) have agreements that allow you to pay taxes only where you live. 
  • Nonresident Tax Rules: Some states (like New York) may require you to file a nonresident return if your employer is based there. 
  • Credit for Taxes Paid: If you pay taxes to another state, your home state may offer credits to avoid double taxation. 

Here are a few examples of scenarios you could encounter if you live in one state and work for an employer in another:

  • You live in New Jersey and work for a New York employer (remotely). New York has a “convenience of the employer” rule—so unless your employer requires you to work remotely, you may still owe New York taxes. You’d file a nonresident return in NY and a resident return in NJ, possibly getting a credit for NY taxes paid. 
  • You live in Texas (no state income tax) but work remotely for a California company. You only owe federal taxes since Texas has no income tax. California generally doesn’t tax remote workers who don’t physically work in the state. 

The “Convenience of the Employer” rule.

These states may require you to pay taxes if your employer is based there, even if you work remotely elsewhere:

  • New York 
  • Pennsylvania 
  • Connecticut 
  • Delaware 
  • Nebraska 

What about states with no income tax?

If you live in a state without an income tax, you won’t owe state taxes there. These states don’t have state income tax: 

  • Alaska 
  • Florida 
  • Nevada 
  • South Dakota 
  • Texas 
  • Tennessee 
  • Washington 
  • Wyoming 

Additional considerations for remote self-employed or freelancer nomads:

  • Must pay self-employment tax (Social Security & Medicare). 
  • May need to file quarterly estimated taxes to avoid penalties. 
  • Business expenses (like co-working spaces) may be deductible. 

How are you taxed when working remotely from another country?

U.S. citizens & expats:

  • If you’re a U.S. citizen working abroad, you still owe federal income tax. You may qualify for the Foreign Earned Income Exclusion (FEIE), which allows you to exclude a portion of your foreign earnings. 

Local tax laws:

  • You might also owe taxes in the country where you live, depending on tax treaties and local regulations. 

Foreign Tax Credit (FTC):  

State residency:

  • Some states (like California and New Mexico) still require state taxes unless you cut ties completely (no home, driver’s license, or voter registration there). 

Filing taxes in multiple states: resident vs. non-resident taxes.

Resident taxes:

  • You are typically a resident of the state where you have your permanent home (domicile).
  • Residents must file a full-year resident return and report all income earned from any state (including out-of-state income). 
  • Most states offer tax credits for income taxes paid to other states, preventing double taxation. 

Non-resident taxes:

  • If you earn income in a state but do not live there, you must file a non-resident return in that state. 
  • You only pay taxes on income sourced from that state (e.g., wages from a job, rental income, or business earnings). 
  • The state where you are a resident may give you a credit for taxes paid to the non-resident state. 

Part-year resident taxes:

  • If you moved during the year, you may be considered a part-year resident in both your old and new states. 
  • Typically, you file part-year returns in both states, reporting only the income earned while you lived there. 

What should you do?

  • Check if your state has reciprocity with your employer’s state. 
  • Confirm if your employer’s state has a “convenience rule.” 
  • See if your home state offers a tax credit for taxes paid to another state. 
  • Keep detailed records of where you earn income and how long you stay in each place. 
  • Consider establishing residency in a tax-friendly state if you’re a domestic nomad. 
  • Work with a tax professional to navigate multi-state or international tax issues. 

We know that tax laws can be complicated and sometimes overwhelming. For case-specific questions, consider reaching out to your state’s department of taxation. As a remote worker, consulting a tax professional can also make it easier to navigate the complexities of income taxes.  

If you’re still unsure about your tax liability or want to explore tax benefits in your state, we’re here to connect you with the right resources and professionals.

Financial New Year’s Resolutions: 10 Goals for 2025

Posted on by Hillary Mitchell

The clean slate of a new year often comes with fresh motivation to meet our goals—whether that means reading more, getting in shape, or spending more quality time with loved ones. For some, these goals revolve around a particularly stressful topic: finances. While setting financial new year’s resolutions can feel daunting and complicated, the long-term return and peace of mind is well worth the effort.

To get you started, we’ve compiled a few tips from our team to reduce mental stress and help your financial life run like a well-oiled machine this year. Here are ten financial new year’s resolutions for your 2025:

Get better at budgeting. 

The key to budgeting is tracking and understanding your spending habits. Once you understand your habits, you can make incremental changes to meet your goals. When doubt, use the 50-30-20 rule. That is, you should allocate 50% of your budget to essentials, 30% for discretionary expenses, and 20% to savings.   

Max out your 401K contributions. 

While this is easier said than done, we recommend prioritizing these contributions as much as you’re able. At a minimum, you want to be contributing enough to get the full match from your employer. If possible, try to max out your 401k or employer plan at the annual limit ($23,500 for 2025).   

Automate your savings. 

Set up your accounts so that part of your paycheck automatically goes to a savings or investment account before you have a chance to spend it. You might also consider setting up different savings accounts for different goals. For example, an emergency fund account (which should be a top priority) can be separate from your vacation planning account.   

Update your estate plan and will. 

Ensuring your estate plan and will are up-to-date relieves the burden of making difficult decisions in a crisis. If estate planning feels overwhelming, don’t worry. Your Commas advisor can help you get connected to the right resources and ensure you have beneficiaries where appropriate. In the meantime, start small by creating a list of your personal and financial information and accounts, as well as your passwords, and put them all in a secure place.  

Pay attention to what conversations you have about finances. 

Every household’s approach to their finances is different. Whether you manage your finances individually or have shared accounts with another person (or people, if you have children), identifying the culture around money in your home can be a good early step in decreasing stress and finding financial peace of mind.  

Try asking yourself these questions:

  • What truly matters most to me, and how well do my financial decisions support those priorities? 
  • How do I/we make decisions about spending, saving, and giving, and what does that reveal about my/our shared priorities and values? 
  • Do we have open and honest conversations about money, or is it a source of tension in our home? 

For parents: 

If you do have younger children, you might consider using an app like Greenlight to offer an allowance and help them start understanding financial basics like spending, saving, and giving. Getting started young allows your kids to make (and learn from) financial mistakes while the stakes are still low, in a safe environment.  

If your children are teenagers or young adults and require less supervision, conversations will shift to managing money earned at a job, saving for college, or filing taxes. Talking about money with kids of any age shows you’re comfortable discussing finances with them—and opens the door for them to come to you with financial questions.   

Read (or listen to) a great book. 

Use some time this year to explore literature on financial management, investing, and market history. We particularly recommend The Investment Answer, The Opposite of Spoiled, The Psychology of Money, and The Millionaire Next Door.  

Track all your charitable giving. 

With some smart planning, you can increase your charitable giving by using available tax benefits. By taking time to educate yourself on the benefits of charitable giving, you can gift more by gifting smarter.  

Don’t let the content stream overwhelm you. 

With an incredible amount of content and current events coverage more accessible than ever, it’s often difficult to keep panic—or, at least, a constant sense of anxiety—at bay. Today’s financial news might seem urgent, and the markets may fall, but it’s the long-term view that matters most when it comes to investing. We know the markets reward discipline and resilience. Before you act on what you come across on your newsfeed, take a step back and refocus on your end goal.  

Don’t wait until April to do your tax planning. 

Rather than waiting until the last minute to scrounge up paperwork, spend some time thinking ahead about what you’ll need to file your taxes. This mindset may also end up saving you money, as some tax benefits can be gained by taking certain actions prior to December 31.  

Add this bonus financial new year’s resolution: create a file system (if you don’t already have one) to keep your tax paperwork handy throughout the year, especially if you work for yourself or run a business. 

Connect with a financial advisor. 

Financial advisors aren’t just for soon-to-be retirees. In fact, if you’re in the early or middle stages of your career, a relationship with a trusted financial advisor can make a significant difference to your future by helping you circumvent commonly made mistakes and stay on track with your goals. 

Having an experienced professional who can take an objective view of your financial situation and guide you through complicated financial decisions like major purchases, long-term savings, or equity compensation elections can help you make the most of your wealth accumulation years—and provide peace of mind along the way.  

If you have found yourself setting a goal to ‘get your finances in order’ for another consecutive year, it may be a good time to talk with a professional! At Commas, we love to work with people who are motivated to make the most of their income—even if they’re not sure where to start. If that sounds like you, we can help. Let’s talk. 

Maximizing Your Charitable Giving

Posted on by Kelsie Joos

When it comes to giving back, there are a few tax-efficient strategies to make the most of your contributions and maximize your impact on the organization.

1️⃣ Qualified Charitable Distributions (QCDs): If you’re over 70½, the IRS allows tax-free IRA distributions directly to charity, reducing your tax burden and required minimum distributions!

2️⃣ Gifting Appreciated Stock: Instead of selling highly appreciated stock and paying capital gains, donate it directly! The charity pays no taxes, and you avoid capital gains, amplifying your impact.

Additionally, if you’re an Ohio resident, learn about the dollar-for-dollar Ohio SGO tax credit to directly support educational institutions here.

“When it comes to charitable giving, sometimes it can be something that kind of gets put on the wayside in terms of different things you can do in order to maximize your charitable giving. We have lots of clients that are charitably inclined and what we’re able to do is just maximize that gift by employing different strategies.

One of the strategies is called qualified charitable distributions. If you’re over 70 and 1/2, the IRS actually allows you to make tax-free distributions from your IRA to charitable organizations. And what this does is when you’ve been saving into your IRA, you’ve always been deferring those taxes so when you make this charitable distribution, you actually never pay taxes on it yourself and the charity never pays taxes on it. It’s a way that you could marginally increase the way that you’re giving. Another benefit to using qualified charitable distributions is that it this can ultimately lower your RMS your required minimum distribution. The more you get out of that IRA tax free and the more money giving from your IRA is lowering the required minimum distributions and ultimately lowering the amount of taxes you’ll pay on those dollars.

Another way to give charitably while maximizing tax efficiencies, is giving appreciated stock. A lot of organizations these days are able to take charitable donations in cash, but also in appreciated securities. What can happen is you’ve been gifted, maybe some really appreciated stock some legacy stock from grandparents or parents or maybe you bought stock years and years ago and you’ve never sold it and it’s been growing all these years. Now there’s a lot of built up capital gains in that fund, where if you were to sell it you, pay capital gains tax versus if you gift that share to charity, they receive it and do not pay taxes on it and you also have never paid taxes on that appreciation.”

Should You Contribute to a Cash Balance Plan?

Posted on by Kelsie Joos

Thinking about your retirement plan? A Cash Balance Plan could be your game-changer! They are perfect if you are a business owner looking to make substantial contributions, have extra cash sitting around, or foresee a large tax bill this year. Ready to explore if it’s right for you? Let’s talk!

“A cash balance plan is a type of retirement plan. It’s a defined benefit plan that qualifies for tax exempt status. Cash balance plans don’t make sense for everybody but for those who they do make sense for they can be really powerful.

Who is a good fit?

Business owners who want to make a large contribution into a retirement plan are the perfect fit, specifically if you’re wanting to get more into the account than traditional plans allow, such as a 401(k) or IRAs. So if you have a lot of cash sitting on the sidelines that you want to get put away for retirement, this could be a really good fit for you. Also if you’re expecting an extremely large tax bill in any given year, getting money put into this account will decrease that tax impact. And then thirdly, if you are getting close to retirement or starting to prioritize retirement more and are really looking to catch up this is a great way to get large lump sums into a plan.

How much can I contribute?

So there is no contribution amount for a cash balance plan that applies to everybody. These plans are age dependent so that means that you’re going to need an actuary to calculate how much you can contribute into a plan in any given year. But that being said it is quite flexible from year to year and so as cash flow changes, we’ll be able to change the plan contribution limits with you. A cash balance plan is an extremely powerful account for those who are wanting to prioritize retirement who have extra cash on the side or who want to decrease their tax bill in a given year. It doesn’t work for everybody but if it does work for you it could make make a huge difference in your plan so if you think that this might be a good fit, please don’t hesitate to reach out ”

Reducing Your Lifetime Tax Bill

Posted on by Kelsie Joos

Tax planning isn’t just about reducing taxes today. The goal is to minimize your lifetime tax bill. Thinking beyond the short-term can sometimes lead to smarter tax decisions!

“When it comes to taxes, a lot of people come wanting to reduce their taxes in the given year. But what we really want to do is make sure that you’re paying the lowest amount of tax possible over your entire lifetime. Sometimes, that might even mean paying more tax today, intentionally, so that your future tax rates are decreased. And so when you’re working to develop a solid tax plan you want to consider the future and the present in order to make the right decisions.”

Year-End Tax Tips to Make the Most of Your Holiday Season

Posted on by Kelsie Joos

Tax planning may not seem particularly festive. However, at Commas, we believe that tax preparation should be a continual process. If we reserve taxes solely for April each year, we may miss out on the massive benefits proactivity brings.  

Taking a few moments to implement our year-end tax tips can help simplify your Spring and even reduce your taxes. But, even better: Following these year-end tax tips can help you give more back to your community, or allow you to provide generous support for your family.  

Here’s what you need to know.  

Year-end tax tip #1: Accelerate your charitable giving.  

Sending one year-end check instead of several can benefit both you and your favorite charities. With a tax-deductible gift to a qualified organization, you can reduce your taxable income.  

Think about the organizations you support. If they’re nonprofit educational, religious, or charity groups, there’s a good chance that they qualify for tax-exempt donations. (The IRS has a convenient search tool you can use to double-check.)  

Next, consider the amount you usually give. Generally, you can claim donations on your taxes if they’re less than 60% percent of your adjusted gross income. If the amount you give is more than the standard deduction, claiming the donation as an itemized deduction can reduce your taxes.  

Interested in seeing even more benefits from this year-end tax tip? If you’re able, you can donate stock to your causes, instead of cash. This can help you avoid capital gains tax and allow you to deduct full market value for your appreciated asset.  

Year-end tax tip #2: Protect yourself from tax underpayment penalties. 

In theory, tax withholding happens behind the scenes, before you get your paycheck, and should cover your estimated tax payment for the year.  

Sometimes things change, and the estimated tax payment doesn’t line up with the bill. If it turns out that your regular tax withholding only pays part of your actual taxes, you could be surprised with a large tax bill come Spring.  

Give yourself the gift of zero surprises this Christmas with this year-end tax tip! The IRS has an online tool you can use to determine whether your estimated tax withholding is equivalent to the amount of taxes you owe. If necessary, you can use this information to file a new Form W-4 and adjust your tax withholding.  

Year-end tax tip #3: Contribute the maximum amount to your retirement accounts.  

Tax-deferred retirement accounts are an incredible way to grow your funds over time. At the end of the year, check in on your accounts to see if you’re on track to maxing out your contributions. 

And, if you can, consider making those maximum contributions prior to midnight on New Year’s Eve. For many types of IRA contributions, you have until the Spring tax filing deadline.  

Here’s the thing: The sooner you contribute money into your IRA, the sooner it has the ability to grow. Even a few months can make a big difference, especially if you make routine end-of-year maximum contributions.  

What’s more, making the maximum deductible contribution will help you reduce your taxable income for the year. If you’re looking for a way to deduct your taxes and increase your investing power at the same time, this is a great year-end tax tip to keep in mind.  

For 2023, you can contribute $6,500 to your IRA, or $7,500 if you’re over 50. If you’re maxing out your 401(k) contribution, the 2023 ceiling is $22,500 (or $30,000 for those 50+). It’s worth noting that you have until the April 2024 tax deadline to make your 2023 contributions. But you may want to consider taking care of this in the 2023 calendar year to make it easier to track. Note that in 2024, the contribution limits will increase across the board for IRAs, 401(k) plans, and Health Savings Accounts. 

Bonus: for those saving into a Health Savings Account (HSA), the same deadlines apply. To maximize your HSA, be sure to contribute $3,850 if you have self-only coverage, or $7,750 if you have family coverage (add $1,000 to each of those if you are over age 55). These can be great retirement accounts if used properly.  

Year-end tax tip #4: Pre-pay some bills for yourself or your children.  

If you’re going to itemize instead of taking the standard deduction, look ahead to your family’s bills due in January. You may be able to accelerate some of these qualifying expenses. Then, you’ll be able to claim those deductions for this year’s taxes.  

Some qualifying deductible expenses include:  

  • Mortgage payments 
  • Property taxes 
  • Tuition (for yourself or for your children) 
  • Estimated state income tax (as long as it’s due prior to January 15) 
  • Hospital or doctor’s bills

It’s a good idea to run these expenses past a professional, just to make sure you are able to claim them for this year’s taxes. Which leads nicely into a bonus year-end tax tip:  

Year-end Tax Tip #5: Line up a Tax Specialist for filing your taxes.   

If you’re looking for a new tax preparer, now is the time. And, if you’re happy to work with your current tax preparer, now may be a good time to check in with both them and your financial advisor. These two professionals should be working together to ensure that your overarching financial plan and your tax plan are in sync. That process should happen far earlier than April 15th, especially if you’re planning on taking advantage of year-end tax tips to streamline your tax season.  

Once you’ve spoken with your advisors, relax! Enjoy your holiday season. Hopefully, taking a few moments to consider your 2024 tax strategy will give you the peace of mind you and your family needs.  

Tax Guide 2023

Posted on by Hillary Mitchell

Tax season has officially begun! This year, the Commas team has put together a comprehensive guide to help you navigate tax season. This guide includes key tax terms and strategies you should know and helps you answer questions like these:

• Should you do your own taxes or hire a professional?

• What tax documents do you need?

• Where do you find tax documents for your investment accounts?

Click here to download the full PDF of the Commas tax guide. 

Key Financial Data for 2023

Posted on by A.Tuke

Each year, the Commas team compiles the key financial data for the year ahead. This comprehensive guide is intended to be a go-to piece for various facets of retirement, tax, and estate planning. Some of the key data points include: 

  • 2023 tax rate schedule and brackets 
  • Standard and special tax deductions 
  • Gift and estate tax exclusions and credits 
  • Health Savings Accounts (HSA) contribution limits 
  • Social security benefits 
  • Retirement plan contributions 

Click here to download the full PDF of the 2023 Key Financial Data guide.