October 27, 2020
Missouri issues guidance on income tax withholding and nexus for teleworkers, including those employees working temporarily in the state due to COVID-19
The Missouri Department of Revenue explained in its withholding tax frequently questions (FAQs) that income tax and withholding apply to wages earned within the state by employees who are working remotely within the state pursuant to the normal rules that apply. The Department gives no exception for teleworkers who are temporarily working in the state due to COIVD-19.
Below is the FAQ.
Q: Are the wages I pay to employees in Missouri for "remote work" subject to Missouri withholding?
A: Yes. Any time an employee is performing services for an employer in exchange for wages in Missouri, those wages are subject to Missouri withholding. This applies in the case of "remote work" where an employee is located in Missouri and performs services for the employer on a remote basis. This rule also applies if the service for which the employee is receiving wages is "standing down" (i.e., when the employer instructs the employee not to work but the employee is still being paid).
Missouri income tax and withholding requirements
Missouri residents are allowed a credit for income taxes imposed by another state, political subdivision, or the District of Columbia on income from sources taxable in the other jurisdiction and in Missouri. The maximum credit allowed cannot exceed an amount which bears the same ratio to the Missouri tax due as the amount of Missouri adjusted gross income derived in the other taxing jurisdiction bears to Missouri adjusted gross income from all sources. (Missouri Employer's Tax Guide.)
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