General Tax Guidelines for HR and Payroll Professionals

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Determining where an employee “works” for tax purposes is no longer straightforward in today’s environment of remote work, hybrid schedules, and multi-state employment. When work location rules are misunderstood or applied incorrectly, organizations can face improper tax withholding, employee dissatisfaction, compliance exposure, and time-consuming corrections. For payroll and HR professionals, understanding how to properly define and code work locations in the payroll system is essential to avoiding preventable errors.

This practical webinar breaks down work location and state and local tax rules in clear, plain language without overwhelming tax jargon. You’ll gain a step-by-step understanding of how an employee’s residence differs from where they physically perform services, and why that distinction drives state income tax withholding, unemployment tax obligations, and certain benefits considerations. Through real-world scenarios and system-based explanations, we’ll clarify why payroll platforms behave the way they do and how to proactively prevent common setup mistakes. You’ll also walk away with simple audit techniques you can apply immediately to confirm employees are configured correctly before payroll runs.

This session is ideal for HR professionals and payroll staff who want a clearer, more confident understanding of work location rules, remote and hybrid tax implications, reciprocal agreements, and multi-state payroll compliance—without getting lost in technical language.

Your Benefits For Attending:
  • Distinguish between where an employee lives and where they physically work—and understand how that impacts payroll tax withholding and unemployment obligations.
  • Identify the correct state and local taxes to withhold, including situations involving remote, hybrid, and multi-state employees.
  • Recognize when employees may be taxed in more than one state, including how reciprocal agreements and special rules apply.
  • Understand common local taxes and how they are generally calculated within payroll systems.
  • Avoid frequent payroll setup errors, including incorrect tax blocking and work location coding.
  • Perform practical payroll audits and know when to escalate complex tax issues to a payroll team member, vendor, or specialist.

Attending this webinar will give you practical confidence in handling complex work location scenarios, helping you reduce payroll errors, prevent compliance issues, and minimize employee frustration before it starts.

Level: Basics
Format: Live webcast
Instructional Method: Group: Internet-based
NASBA Field of Study: Taxes (2 hours)
Program Prerequisites: None
Advance Preparation: None

  • Raeann Hofkin

    Raeann Hofkin

    Raeann Hofkin has nearly 4 decades of experience in all facets of payroll management, both domestic and international. She served on the American Payroll Association Certification Board from 2016 to 2018 as a subject matter expert, the Board of Contributing writers for a number of yea [...]

    View Full Profile

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Webinar Survey Overall Rating

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Reviews From Webinar Survey

Our webinars are crafted to deliver exceptional value and insight to business professionals. Below, you'll find genuine feedback from attendees.

Darlene P.
April 6, 2026
4.0 / 5
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4.0 Stars
Do you have any other comments, questions or concerns?
I appreciate getting up to date information
Cindi F.
April 3, 2026
4.2 / 5
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Roxanne P.
April 2, 2026
4.6 / 5
Webinar Rating:
4.7 Stars
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Lucked out that the presenter talked about PA and we have one EE there that I need to check for any local taxes. Also have EE's in Vegas so want to check on OT setup.
Jessica E.
April 2, 2026
4.8 / 5
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4.7 Stars
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5.0 Stars
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I am very glad how to tax remote workers was covered.

Frequently Asked Questions

State income tax withholding for remote and hybrid employees is determined by where the employee physically performs services, not necessarily where the company is headquartered or where the employee lives. This distinction is crucial—and often misunderstood. Generally, employees owe state income taxes to the state where they work, and employers are required to withhold accordingly. For hybrid employees splitting time between states, apportionment may be required based on the days worked in each state. Several states apply a 'convenience of the employer' rule (such as New York), under which remote work days are treated as if worked in the employer's state unless the employee had a bona fide office elsewhere required by the employer. HR and payroll teams must accurately code employee work locations in the payroll system and stay current on state-specific rules to avoid incorrect withholding, employee tax surprises, and compliance penalties.
Reciprocal tax agreements are arrangements between two states that allow residents of one state who work in the other to pay income tax only in their home state, not in the state where they work. For payroll professionals, this simplifies withholding for employees who live in one reciprocal-agreement state and work in another—only the employee's resident state income tax needs to be withheld. Common examples include agreements between states like Virginia and Maryland, or New Jersey and Pennsylvania. To benefit from a reciprocal agreement, the employee typically must submit a withholding exemption certificate to their employer. It is critical to note that reciprocal agreements are not universal—only specific state pairs have them, and they do not apply to local income taxes or unemployment. HR and payroll teams must maintain a current list of applicable agreements and ensure payroll system configurations reflect them accurately to prevent over- or under-withholding.
State Unemployment Tax Act (SUTA) obligations are determined by the state where an employee's services are localized—generally the state where the employee regularly performs work. Under federal guidelines, a four-factor test is used to determine SUTA jurisdiction: (1) where the employee's services are localized, (2) the base of operations, (3) the place from which operations are directed or controlled, and (4) the employee's state of legal residence. For remote employees working entirely from one state, SUTA typically applies to that state exclusively. For employees who regularly work in multiple states, the determination can become complex. Misassigning SUTA to the wrong state can result in underpayment to the correct state and overpayment to another, creating audit exposure and potential refund complications. HR and payroll professionals should review employee work location assignments regularly—especially when employees move or adopt permanent remote arrangements—to ensure SUTA filings are accurate.
Payroll work location and tax coding errors are among the most frequent sources of compliance problems for HR and payroll teams. Common mistakes include: failing to update an employee's work location when they move or go permanently remote, incorrectly coding employees to the company headquarters state rather than their actual work state, not activating the correct local income tax jurisdictions for employees working in cities or counties with local taxes, applying reciprocal agreement exemptions without receiving the required employee certification, and using the wrong tax blocking codes in payroll systems that override default calculations. These errors can result in under-withholding state or local taxes—creating tax liabilities for employees at year-end—or over-withholding, which damages employee trust. HR professionals should conduct periodic payroll audits to verify that each employee's work location and corresponding tax withholding setup accurately reflects their actual work arrangement, especially following onboarding, relocations, or shifts to hybrid or remote schedules.
Proactive payroll audits focused on work location tax configuration can prevent costly errors before they appear on W-2s or trigger state notices. Practical audit steps include: generating a report of all employees' coded work locations and comparing them against recent address updates, remote work agreements, or relocation approvals; reviewing employees with work states different from their residence states to confirm reciprocal agreements or multi-state withholding setups are correct; checking that local tax jurisdictions are activated for all employees working in applicable cities or counties; and reviewing any employees with tax blocking codes enabled to confirm that blocking is intentional and properly documented. When complex scenarios arise—such as employees working internationally, in multiple states with no reciprocal agreements, or in states with unique rules like New York's convenience of the employer doctrine—payroll professionals should escalate to a payroll specialist or tax advisor. Establishing a pre-payroll checklist that includes work location verification reduces the risk of errors compounding over multiple pay periods.