February 17, 2022
Delaware's temporary COVID-19 income tax relief for teleworkers applies through December 31, 2021
The Delaware Division of Revenue (DDR) announced in Technical Memorandum 2022-2 that the temporary COVID-19 income tax relief for teleworkers, which was effective June 1, 2020, applies through December 31, 2021.
Prior to the COVID-19 emergency, the DDR applied the "convenience-of-the-employer rule," which asserts that if Delaware employees are working outside the state for their own convenience, and not for the necessity of the employer, those wages are sourced to Delaware for income tax purposes. (30 Del. C. Section 1124(b); Schedule W, Delaware Individual Non-Resident Income Tax Return; Flynn v. Director of Revenue, Delaware Tax Appeal Board Dkt. No. 1504, 9/14/2011.)
In consideration of the state's COVID-19 emergency declaration, the following applies to the wages of Delaware employees working remotely outside the state. (Technical Information Memorandum 2021-2; EY Tax Alert 2021-0613.)
Delaware taxpayers could treat all days on which they worked from a home outside of Delaware as days worked outside of Delaware on Schedule W.
Taxpayers could report days worked from home as days worked outside of Delaware on Schedule W if either:
Once employers gave employees the discretion to return to work within their Delaware offices, those employees could no longer report days worked from home as days worked outside of Delaware on Schedule W if those employees elected, but were not required, to work remotely.
The DDR noted that it may require proof of any direction or advance permission given by an employer after June 1, 2020 concerning remote work.
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