March 21, 2022
Missouri Department of Revenue provides remote worker income tax guidance for employers and employees
In consideration of the recent trend of employees transitioning from working at the office to remote work from home, the Missouri Department of Revenue has published a new web page to assist employers and employees with questions they may have about alternative remote work assignments.
The Department previously announced that there are no exceptions to the income tax rules for employees who are/were temporarily working from home due to the COVID-19 emergency. (See EY Tax Alert 2020-2561.)
Following are answers to the some of the questions employers frequently ask about income tax withholding for wages paid under alternative work arrangements.
- I am an employer located in another state, but I have employees who work in Missouri. Are the wages I pay to these employees subject to Missouri state income tax withholding?
Yes. If employees receive wages for services provided within Missouri, those wages are subject to Missouri income tax withholding regardless of where the employer is located.
- Is a Missouri employer required to withhold Missouri state income tax from the wages of nonresident employees who work entirely outside of Missouri?
No. If nonresident employees perform all their services outside of Missouri, the wages paid to those employees are not subject to Missouri income tax withholding.
- Are the wages of a nonresident employee performing services within Missouri subject to Missouri state income tax withholding?
Yes. Withholding is determined by the location where the employee performs services in exchange for wages. If the wages are for services performed in Missouri, Missouri state income tax withholding is required.
- Are the wages I pay to employees in Missouri for "alternative remote work" subject to Missouri state income tax withholding?
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 rule also applies when an employee is located in Missouri and performs services for the employer within Missouri on a remote basis.
This rule also applies even 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).
- What state income tax withholding forms do Missouri employees submit to their employer?
- Missouri employees generally. Use of federal Form W-4 is not allowed for Missouri state income tax withholding purposes. Each employee is required to file a completed Form MO W-4 to indicate their filing status on their income tax return. The Form MO W-4 will be used by the employer to determine the amount of Missouri income tax that must be withheld from each paycheck.
- Missouri residents working 100% outside the state. Missouri residents performing services wholly within another state imposing an income tax may file Form MO W-4C, Withholding Affidavit for Missouri Residents, to request that no Missouri income tax be withheld from their wages.
- Missouri nonresident working partly within and outside of Missouri. If services are performed partly within and partly without the state, only wages paid for services performed within Missouri are subject to Missouri income tax withholding, provided the employee files with the employer a Form MO W-4A, Certificate of Nonresidence or Allocation of Withholding Tax.
For additional information, see the Department's withholding tax frequently asked questions web page.
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