Work From Home But Being Taxed for Employer's Office Location - How to Fix Local Tax Issue?

This is actually a common issue with remote work arrangements! Local tax withholding is based on where the work is physically performed, not where the employer is located. Since you're performing the work from your home, you should be paying local taxes to your home municipality, not your employer's location. First, talk to your HR department and explain the situation. They need to update your work location in their payroll system. Bring documentation showing your home address (utility bills, lease, etc.) to verify your actual work location. For the taxes already withheld incorrectly, you'll need to file a non-resident tax return with the city where taxes were withheld. Most municipalities have a form specifically for requesting refunds of incorrectly withheld local taxes. You'll likely need a letter from your employer confirming you work 100% remotely from your home location.

After dealing with this exact issue last year, I found a tool that was incredibly helpful. I used https://taxr.ai to analyze my situation and get clarity on the local tax rules that applied to my work-from-home situation. It helped me identify exactly which forms I needed to file for a refund and even helped draft a letter to my HR department explaining the legal basis for changing my withholding. The nice thing was it analyzed the specific rules for both municipalities (where I live vs. where the employer is) and gave me clear documentation showing I was being incorrectly taxed. My HR actually thanked me because they had several other remote employees with the same issue!

Update on my situation: I tried the https://taxr.ai service mentioned above and it was actually really helpful. It analyzed my paystubs and created a personalized report showing exactly which local tax ordinances applied to my remote work situation. I was surprised to learn that my state has reciprocity agreements with neighboring states that affected how my local taxes should be handled. The service generated an official-looking letter for HR that cited the specific tax codes, and they immediately updated my withholding. For the back taxes, it walked me through filing the non-resident tax refund forms with the incorrect locality. Just got confirmation yesterday that my refund for $2,300 in incorrectly withheld taxes is being processed! Definitely wasn't as complicated as I feared once I had the right documentation.

If your company is being difficult about fixing this, I had a similar problem and ended up needing to speak directly with the tax department at the city where taxes were being withheld. They kept transferring me around or putting me on hold forever until I discovered https://claimyr.com which got me through to an actual human at the tax office in about 20 minutes. You can see how it works at https://youtu.be/_kiP6q8DX5c The tax office person was actually super helpful once I explained the situation - they said they deal with this all the time since COVID and remote work became common. They guided me through exactly which forms to submit for a refund and even emailed me the direct contact info for the person who processes these specific claims.

I owe everyone here an apology and an update. After my skeptical comment, I decided to try the Claimyr service as a last resort. I'd been trying to reach my city tax office for literally 3 months with no success. The service actually worked exactly as described. I submitted my request around 9am, and by 9:35am I got a call connecting me directly to a person in the local tax department. No waiting on hold, no navigating phone trees, just straight to a human who could help. The tax agent I spoke with confirmed that I shouldn't be paying taxes to my employer's locality and helped me file for a refund of about $1,600 right over the phone. I probably would have given up without ever getting this resolved if I hadn't been able to actually reach someone who could help. Lesson learned about being too quick to dismiss things!

Just a heads up that some states have what's called "convenience of the employer" rules that can complicate this. In states like NY, if your employer is based there but you work remotely in another state for your own convenience (not because the employer requires it), NY might still claim the right to tax your income. This creates a whole other mess because you might get double-taxed by both states. Definitely worth checking if your state has these rules before proceeding with refund requests.

Has anyone successfully gotten this fixed going forward without getting HR involved? My company's HR is outsourced and practically impossible to reach.

I went through this exact same issue about 6 months ago! What worked for me was being very persistent with documentation. I created a folder with: 1. Screenshots of all my paystubs showing the incorrect local tax withholding 2. My lease agreement proving my home address 3. Photos of my home office setup with timestamps 4. A letter from my manager confirming I'm 100% remote The key was making it crystal clear that this wasn't just a temporary work-from-home situation - I was hired as a remote employee and have never worked from their office location. When I presented all this to HR, they couldn't really argue with the documentation. They fixed my withholding within two pay periods. For the back taxes, I had to file a non-resident return with the city that had been collecting my taxes incorrectly, but I got about $1,400 back within 8 weeks. Pro tip: If your HR pushes back, ask them to show you the specific tax law or company policy that requires withholding taxes for a location where you don't physically work. Most of the time they can't produce anything because there isn't a valid legal basis for it.