The Great Resignation has opened doors for many employees to secure elevated positions and enhanced salaries, while also shifting some authority back to the average worker. Although we frequently hear about individuals departing from their jobs in droves, there are plenty who are content in their roles and are merely seeking to move closer to family or in search of a more affordable living situation. Relocating can be quite a complex process, especially when trying to change residence without leaving your job. There are several factors to think about prior to making such a decision.
The Flexibility to Work Remotely
With the rise of remote work in recent years, shifting closer to family or embarking on a long-desired traveling lifestyle may seem like a fantastic prospect. After all, if daily office attendance is not required, why remain in the same place when there are countless adventures waiting to be explored?
Despite the new possibilities granted by the pandemic, navigating employment regulations can be intricate, and many rules haven’t been amended to reflect the increase in remote roles. Should an employee decide to relocate to a different state, particularly to one where their company lacks a formal presence, it may lead to significant challenges for the Human Resources and Accounting divisions, possibly putting you at risk.
Must I Stay Close to the Office?
The prevalence of remote work has altered traditional office environments, making it feel unnecessary to remain fixed in one location, especially with numerous individuals having demonstrated their productivity can thrive outside of conventional office settings over the past couple of years.
It’s important to remember that even if your work is remote and likely to remain so for now, your employer may still have the right to require you to stay within a reasonable commuting distance from the office. Although it might be an extreme measure for many employers, most organizations reserve the right to terminate your contract if you move too far away without informing them.
However, if you’re working on a contractual basis, you might have negotiated terms that permit remote working or specific location requirements.
Relocating Out of State
The Society for Human Resource Management states, “the laws of the state where the employee performs their duties typically govern the employment relationship, regardless of the employer’s location.” Therefore, if you move to a new state, your employer might be unintentionally violating that state’s employment laws.
It’s wise to consult with both your manager and HR about your intentions to relocate beyond reasonable commuting distance from your current workplace. While there’s no assurance your employer will be accommodating, at least you’ll have clarity on your situation, enabling you to make an informed choice.
Be Aware of Tax Implications
Transitioning to a different state often leads to various expenses. From engaging a moving service to renting or purchasing a new residence and setting up utilities, the costs can accumulate rapidly. Many overlook the tax implications associated with moving across state lines.
Most states impose income taxes, and if you’re relocating from one of the states with no income tax, you could face unexpected challenges when filing taxes. States like Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming impose no income tax, while New Hampshire doesn’t tax earned income. While moving to these states might seem beneficial, they often compensate for lost revenue through alternative taxes or diminished services.
Additionally, certain states have reciprocal tax agreements, enabling residents to work in one state while living in another, paying taxes in their home state. For instance, if you live in Pennsylvania but commute to New Jersey for work, you would solely owe taxes to Pennsylvania thanks to such an agreement.
Before making your move, research thoroughly. Tax situations can become complicated swiftly, especially with multiple states involved. Work with a tax professional alongside your payroll department to ensure all aspects are thoroughly addressed.
Maintain Open Communication
The simplest way to mitigate potential issues for both yourself and your employer is to uphold open and honest communication. While your employer isn’t necessarily a friend, they’re also not your enemy (one would hope), so strive to find a balance between being strategic and transparent. Being candid about your plans can help avert a great deal of hassle for you and your employer alike.
