Overview
Use the checklist below to determine to which state an employee's wages should be reported.
Checklist
The following tests should be considered in the sequence listed.
| Category | Test | Report Wages to |
|---|---|---|
| 1. Localization of services | 1A. All of the employee’s services are performed in Texas. | Texas |
| 1B. All services are performed in Texas except for temporary assignments out of state. | Texas | |
| 1C. The employee’s services are evenly split among Texas and one or more other states. | Go to Category 2. | |
| 2. Employee's base of operation | 2A. The employee works from their home, or goes to a business location to perform their services and to which he or she returns after performing the services. |
The state where the home or business is located. Some services must be performed in that state, if not go to Category 3. |
| 2B. The employee does not have a base of operation. | Go to Category 3. | |
| 3. Place of direction and control | 3A. The employee performs services in two or more states, and receives direction and control from someone located in one of those states. | State where source of direction and control is located. |
| 3B. Direction and control come from a state in which no services are performed, but the employee travels to that state at least once a year. | Same as 3A. | |
| 3C. Same as 3B, except that the employee does not travel to the source state at least once a year. | Go to Category 4. | |
| 4. Location of employee's address | 4A. The employee currently lives in Texas. | Texas |
| 4B. The employee performs services in Texas and one or more other states and the employee resides in one of the other states. | State of employee’s residence — or employer may elect coverage in one of the states where services are performed. | |
| 5. Services outside U.S. | 5A. The employee performs services outside the United States. | If an employee is working for an entity chartered in the U.S., report wages to the state where the source of direction and control is located. For more information, contact the Texas Workforce Commission Tax Department at tax@twc.texas.gov. |
