Brenda Vingiello, Sand Hill’s Chief Investment Officer, joined Squawk Box to discuss her thoughts on the latest market trends and market outlook for 2025. This
Understanding the Side Effects of Working from Any Home
Published Date : July 14, 2020
July 14, 2020
For those fortunate to have jobs that allow working remotely, the transition to working from home (WFH) during the COVID-19 shelter-in-place has been relatively seamless. Granted, those with children at home, especially small children, have graduated to an Olympic level of multitasking. But given the risk to public health, WFH life has allowed many businesses to carry on much as they did before. With the recent announcement of some tech companies transitioning to permanent WFH for employees, my initial reaction was one of sheer jealousy. The idea of never having to commute again, or balance shuttling kids to school and getting dinner on the table at a reasonable hour, seems like a blessing. However, there are some possible negative side effects that are worth examining before jumping on the WFH forever wave.
Does permanent WFH mean you can work from any home? As Mark Zuckerberg recently clarified for Facebook, relocating to a lower cost of living area could result in a pay cut. There is also the added impact from companies no longer needing to hire staff that live in the immediate geographic region of the main office. The applicant pool for open positions could be filled with qualified candidates who live anywhere, meaning your competition could be harder to beat out. If you buy a home and settle down in a new community, but then lose your job or decide to change companies, you’ll find yourself tied to your new geographic region, competing against other well-qualified candidates from all over the country, or even world.
Another consideration is the possible tax consequence of working remotely. Going back to the ‘work from any home’ concept, there have been recent reports of an uptick in vacation home bookings, likely from remote workers wanting to get out of the home they’ve been stuck in for the past several months in exchange for some semblance of a summer vacation. Why work in your home or apartment when you can work next to a lake or on a beach? However, it is important to be aware of the tax impact of working from another state, as certain states have very specific rules on this subject. As reported recently in The Wall Street Journal (WSJ), many states impose income tax on workers who work as little as one day in that state.1 New York is famous for this. If you opt for a quick getaway, working remotely during the week from New York City could subject you to paying non-resident New York state income tax PLUS non-resident New York City income tax (NYC has its own income tax!). As reported by the WSJ, thirteen states and the District of Columbia have agreed not to tax remote workers during the COVID-19 pandemic, but New York, California and over two dozen other states still have taxation of remote workers in place for this year, though this may change in the near future.2
Finally, with any job comes a unique culture that develops when coworkers interact in a shared environment. Office camaraderie is on pause while we are all at home, though some companies have tried to maintain some sense of normalcy through Zoom team events. These shared virtual experiences generally work in a remote setting because the staff already have strong connections built from working together in the physical world. With permanent work-from-home, company culture will inevitably be impacted, especially when new team members are onboarded in a remote environment, only meeting and getting to know coworkers through phone calls and video conferences.
Here at Sand Hill, we can nimbly shift from working in the office to working remotely, allowing us to focus on and connect with our clients no matter our physical location. I am proud of our flexibility, but I also look forward to reconnecting with my coworkers in person—six feet apart, of course.
1- https://www.wsj.com/articles/remote-working-from-a-different-state-beware-of-a-tax-surprise-11590744601
2- Congress is currently in talks to address taxation of remote workers, but as of the publication date of this article, no changes are in effect.
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