Coronavirus and Your Money

Work From Home, Wherever That Is

The pandemic has made it easier to work from a distance, but some far-flung workers have to follow special rules for taxes, health care and insurance.

Ellen Braaten, a child psychologist and associate professor at Harvard Medical School, fell in love with Prague when she spent seven months there on a sabbatical in 2018 and 2019. Following her sabbatical, she went back a few times to finish research she had done there, and she began thinking about how she might spend even more time in Prague while still keeping up with her Boston-based work responsibilities.

Then the coronavirus pandemic struck. Like many other professionals, Braaten found herself working from home—and that presented her with the perfect opportunity to try managing her job full-time from overseas. “There was no excuse for me not to go back to Prague and work there,” says Braaten. “I had a choice to be in a place that I love.” Last fall she spent more than two months in Prague, where she used videoconferencing to attend meetings with her colleagues, teach classes, meet with patients and speak at virtual conferences.

Although there are trade-offs—for one, teaching an evening class at Harvard requires her to be on task from midnight to 3 a.m. in Prague’s time zone—Braaten has found that the situation suits her, and she plans to spend the first few months of 2021 working from Prague. She’s hopeful that employers will continue to accommodate remote work even after the pandemic has passed. “I have a feeling there might be more openness to it because it really works,” says Braaten.

A recent survey from the American Institute of CPAs found that 42% of employed Americans worked remotely at some point during the pandemic. If you’re among them, you may be taking advantage of the ability to work from somewhere that’s not your usual residence—perhaps so that you can enjoy your vacation home for longer periods or spend time with family in another city. But depending on where you go and how long you stay there, you may run into complications when it comes to your taxes, health insurance and other aspects of your financial life—even if you stay within U.S. borders. (For more on how to manage your financial affairs from abroad, see below.)

Check state tax rules

If you work remotely from a state where you don’t have your legal residence, you may have to file an income tax return with that state and pay tax on money you earned from your job while working there. “Some states have a tax-filing obligation that begins the first day you do any work in the state,” says Jared Walczak, vice president of state projects for the Tax Foundation. “Anyone who spends a significant amount of time in a state other than their own likely has an income-tax obligation to that state,” he says.

The good news is that to avoid double taxation, you can usually claim a credit from your home state for any income tax you pay to another state. If you work for a while from a state with no income tax, you’ll pay income tax to your home state without a credit for the time you were away, says Walczak. Plus, more than a dozen states—including Georgia, Illinois, Maryland, New Jersey and Pennsylvania—are not imposing taxes on workers who relocate to those states temporarily because of the pandemic.

One potential stumbling block: the “convenience” rule. Six states (Arkansas, Connecticut, Delaware, Nebraska, New York and Pennsylvania) have rules under which employees may be taxed by the state where their office is located—even though the employees don’t live or work in that state—if they telework for their own convenience rather than because of employer requirements. In addition, Massachusetts is imposing similar rules during the pandemic on those who live and work outside the state if they’re employed by a Massachusetts employer.

Most states with convenience rules have not issued guidance as to whether they will apply the rules to those who are working remotely because of the pandemic, says Eileen Sherr, director for tax policy and ad­vocacy for the American Institute of CPAs. However, New York has said that nonresidents who telecommute during the pandemic for primary offices based in New York are con­sidered working in the state unless the employer has established an office at the nonresident’s location, too.

If your employer’s office is in one of the states with a convenience rule, that could create a situation in which the state where you live and work remotely refuses to credit you for tax paid to your office’s state, says Walczak. Some states, however, are granting leniency to workers; for now, New Jersey, for example, is offering credits to workers who live and telework from New Jersey for offices located in New York, says Walczak.

One other point to keep in mind: Some states have reciprocal agreements through which employees whose offices are in one state but who live in another state are exempt from tax being withheld in the state where they work. For example, if your company’s office is in Washington, D.C., but you live in one of the bordering states of Maryland or Virginia, all of your income is taxed in the state where you live. If, say, you started working remotely from your home in Maryland during the pandemic rather than going to the office in D.C., your tax withholding won’t change.

If you spend time working remotely from a new state, notify your employer’s human resources department of the change so that it can make any necessary adjustments to your state tax withholding, says Sherr. That will help you avoid interest and penalties at tax time. Track the number of days you spend working in each state. “You don’t want a rude awakening when you go to your tax preparer, casually mention that you spent six months in another state, and find out that you should have a lot more detail than you do,” says Walczak. If you stay in a state for more than six months, that may be one indicator to the state that you’re a resident and should be taxed as one. (The state may also consider such factors as which state issues your driver’s license and voter registration.) But usually, you won’t be deemed a resident of a state you are visiting temporarily without intent to become a permanent resident, he says. Most accountants should be able to help you file tax returns in multiple states.

Make a health care plan

It’s wise to brush up on how your health insurance plan covers care outside your home region. Your plan must provide the same coverage for emergency care regardless of where you are in the U.S.; if you have a 20% coinsurance payment for emergency-room visits, for example, that rate applies even if you get emergency care at a hospital outside your plan’s network. Make sure to bring your health insurance identification card with you to your temporary location, as well as phone numbers to contact your insurer.

Whether routine care is covered outside your region depends largely on the type of plan you have. With a preferred provider organization (PPO) plan, you may have nationwide access to in-network care, especially if your plan is sponsored by a large employer through a carrier such as Aetna, Cigna or UnitedHealthcare, says Mark Hope, senior director of the health and benefits group at consulting firm Willis Towers Watson. So if you are spending time away from home and want to see, say, a primary-care doctor or a specialist, you may be able to find an in-network physician and pay the same co-payment or coinsurance that you would with your in-network doctors at home. Plus, PPOs typically cover out-of-network care to some degree. For example, if you see a physician whose office is out of your plan’s network, you may have to pay a higher deductible and a larger amount for coinsurance or co-payment than for in-network care. PPOs are largely the domain of employer-based insurance plans and are hard to come by in the individual market.

If you have a health maintenance organization (HMO) plan, coverage is likely limited to your home region, and such plans typically do not provide coverage for out-of-network care (except for emergency-room visits). With an exclusive provider organization (EPO) plan, you may have nationwide in-network coverage if the plan is through a large employer, says Hope. Like HMOs, EPOs don’t provide coverage for out-of-network care. If your plan does not provide coverage for prescriptions at pharmacies outside your home geographic area, you may be able to have drugs delivered through a mail-order service.

Take advantage of telehealth. Regardless of the type of insurance plan you have, consulting with your doctors via video chat or phone call is a strong option for care that can be managed remotely, such as attending a session with a mental-health therapist or getting a prescription from your primary-care doctor for a minor but somewhat urgent need (say, for a rash or allergy symptoms). You may even be able to get virtual assistance for physical therapy or diabetes management.

Usage of telehealth surged during the pandemic as social distancing became the norm. To encourage people to stay home, some insurers waived co-payments or requirements to meet a deductible for telehealth visits, although some policies have resumed standard cost-sharing. Still, you may owe the same amount out of pocket that you would have if you had visited your doctor in person. For insurance plan years that start by December 31, 2021, insurers are permitted to cover telehealth services before the policyholder reaches his or her deductible on a high-deductible health plan paired with a health savings account.

Some online platforms offer telehealth services for a fee without insurance. If your insurer does not provide coverage for consultations with Teladoc (www.teladoc.com), for example, you pay $75 per visit for basic, non­emergency issues, $95 for a dermatology consultation or $99 for a session with a mental-health therapist.

Other considerations for remote workers

If you were managing your financial accounts online before you started spending more time working from a new location, you may not have to change much about how you handle them. But if you’ll be away for a while, have a trusted person regularly check your mail and forward any important documents that come through. The Postal Service’s free Informed Delivery service (https://informeddelivery.usps.com) e-mails images of mail headed for your mailbox. You can ask your local post office to hold your mail for up to 30 days or forward it to a temporary location for up to one year. Or, for a monthly fee, you can have your mail delivered to a service such as PostScanMail (www.postscanmail.com), which sends you images of the outside of each letter and, upon request, forwards you items of your choice or opens them and sends you images of the contents.

Whether you work remotely from your primary home or from a new location, you may save money on the expenses associated with commuting. But don’t overlook other costs. For example, your utility bills may increase as you spend more time in the house. You may also wind up paying for equipment or services that you’d typically use at the office. If that happens, see whether your employer will help. According to Willis Towers Watson, 44% of remote workers said their employer provided some coverage for supplemental computer equipment (such as a monitor or headset), 39% got assistance for wireless mobile devices and services, and 34% got help with computer or laptop expenses.

Managing home and auto insurance. If you’ll be away from your primary home for more than a month, you may want to get a vacant-home insurance policy or endorsement because standard homeowners policies typically deny claims if a home is left unoccupied for at least 30 days, says Michelle Megna, of Insure.com. Or, if you’re spending more time in your house, ask your insurer whether you can get a discount. Some companies offer discounts to retirees because they tend to be home more than working folks, and your insurer may be willing to offer you a similar perk.  

Not using your car to commute? You may be able to save up to 20% on auto insurance premiums if you qualify for a low-mileage discount. Or consider using a pay-per-mile program, such as Allstate’s Milewise or Nationwide’s SmartMiles, in which your insurer sets a base rate and then charges a few cents per mile. Your insurer tracks miles with a dashboard plug-in device or with photos of your odometer that you submit. You’ll likely save money if you drive no more than 10,000 to 12,000 miles per year, says Megna.

Taking your job abroad

If the freedom to work from anywhere lures you to another country, lay the groundwork to keep your financial life running smoothly. (And before you buy a plane ticket, check on coronavirus-related restrictions for travelers from the U.S. as well as visa requirements; see www.travel.state.gov for more information.)

Unless you stay overseas for an extended period—typically about a year or more—how you pay taxes to the U.S. won’t likely change, says Katelynn Minott, a certified public accountant and partner with BrightTax (www.brighttax.com), which provides tax services for expatriates. If you do stay for a longer stretch abroad, you may qualify to exclude your foreign earnings (on up to $107,600 of income for 2020) from U.S. taxation—and that might include income you earn from a U.S. employer while working abroad. If you establish temporary or permanent residency in another country, it may tax you—in which case you may be able to take the foreign tax credit, reducing your U.S. tax obligation.

Your U.S.-based health insurance policy may not take effect in other countries—and if it does, coverage is likely limited to emergency care. (Medicare generally doesn’t extend coverage in countries outside of the U.S.) Because of requirements related to her visa, Ellen Braaten, a child psychologist who spends a few months at a time working remotely for her U.S. employer from Prague, buys local insurance in the Czech Republic. She pays about $300 for six months of coverage that provides emergency and some routine care.

If you’re healthy and will be abroad for a short time, you may get by without ad­ditional insurance. In many countries, the full, out-of-pocket cost of health care is much lower than it is in the U.S. If you want some coverage, consider a travel insurance policy, which may cover medical emergencies as well as the costs if your trip is canceled or interrupted for other reasons. Search for a policy at InsureMyTrip.com or SquareMouth.com.

In theory, managing your bank, credit card and investment accounts from overseas should be simple—after all, many institutions let you view your accounts and make transactions online. But if you try to log in from a foreign country, the institution may suspect fraud and block you. One solution is to use a VPN, which provides a secure connection and hides your device’s IP address and location. One well-regarded service is ExpressVPN (www.expressvpn.com; $8 to $13 a month, depending on how many months you buy). Before you pick a place to stay overseas, investigate how strong internet services are in the area—faulty Wi-Fi will cause a lot of frustration both in handling your financial accounts and performing your job from afar.

Making purchases or withdrawing cash abroad with your U.S. bank account often results in hefty fees. Consider using the no-fee, online Schwab Bank High Yield Investor Checking account, which offers unlimited rebates of out-of-network ATM fees worldwide and charges no foreign-transaction fee for debit card purchases. You must link the checking account to a Schwab One brokerage account, but it requires no minimum balance and doesn’t charge a monthly fee. Another good option for overseas purchases (but not necessarily cash withdrawals) is a credit card with no foreign-transaction fee. That’s the case with many travel rewards cards and all cards from Capital One and Discover.

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