Live in Tennessee, Work Remotely for a Colorado Employer: Who Taxes You?
Answer
Nothing is owed on either side. Tennessee has no wage income tax, and Colorado taxes nonresidents only on work actually performed inside Colorado. Never setting foot in Colorado keeps the income entirely outside its reach, so this pair produces no state return at all.
Last verified
An employer's address is not a tax nexus for its employees. Working from Tennessee keeps the income Tennessee-source, and since Tennessee levies no tax on wages, the income lands nowhere at all.
Colorado also has a layer below the state one, and it is the layer that survives every agreement: A few Colorado cities levy an occupational privilege tax — a flat monthly head charge on anyone working in the city, not a percentage of income. It is not an income tax and no credit offsets it.
What you file
There is nothing to file in either Tennessee or Colorado on these wages. Your federal return is unaffected — the federal government taxes the income whatever the states do.
The two states, side by side
| Tennessee | Colorado | |
|---|---|---|
| Taxes wages | No | Yes — flat |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form DR 0104 with Schedule DR 0104PN |
| Credit for other-state tax | No income tax | Form DR 0104CR |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | Yes |
| Revenue department | Tennessee Department of Revenue | Colorado Department of Revenue — Taxation Division |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Colorado and working in Tennessee gives:Home state only.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: Tennessee → ColoradoWork state only
- 1099 contractor: Tennessee → ColoradoClient state only, if you work there
- Moved mid-year: Tennessee → ColoradoOne part-year return — the state you moved to
Other Tennessee pairs
Questions people actually ask
I live in Tennessee and work remotely for a Colorado employer. Which state do I pay?
Nothing is owed on either side. Tennessee has no wage income tax, and Colorado taxes nonresidents only on work actually performed inside Colorado. Never setting foot in Colorado keeps the income entirely outside its reach, so this pair produces no state return at all.
Which state should my employer be withholding for?
Neither. There is no state income tax to withhold on either side of this pairing, so a state line on your pay stub for Tennessee or Colorado is an error worth querying.
Does my Colorado employer's location alone create a Colorado tax obligation?
No. Colorado sources wages to the place where the work is physically performed, and it does not apply a convenience-of-the-employer rule that would override that. Days you actually spend working inside Colorado are a different matter — those are Colorado-source income and can require a nonresident return.
How current is this?
The Tennessee and Colorado rules on this page were last checked against Tennessee Department of Revenue and Colorado Department of Revenue — Taxation Division on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Tennessee Department of Revenue — individual income taxaccessed 2026-08-07
- Colorado Department of Revenue — Taxation Division — individual income taxaccessed 2026-08-07