I work as an independent contractor in Tennessee. One of my clients is in another state, however, they come to me in Tennessee for my services, which are rendered here and the final product is sent to their choice of destination. I receive a 1099-Misc from the clients state, and the clients state want me to pay income taxes in that state. Is this correct? I thought that I only paid taxes in the state I live and work, which happens to be Tennessee. I never cross into the other state. What does the tax law say about this? Any help would be greatly appreciated.
Apparently, your out-of-state client is not a CPA or Tax Attorney well versed in the tax laws of whatever state they are in. (You forgot to tell us.) But generally, so long as you do not have a physical business presence in another state, and do not conduct business in another state, you have no tax liability to that state. But that's "generally". It depends on the state. I would suggest that you seek the advice of a qualified tax attorney or CPA in your state of TN, instead of making decisions based on us "armchair" CPAs in this public user-to-user forum. Personally, Based on my interpretation of your post, I don't seen any tax liability for you on any legal precedent I'm aware of, to any state other than TN. But then I'm not a tax professional by any stretch of one's imagination.
My client was in the state of North Carolina, and the Department of Revenue there said any income derived from their state was taxable. I did find that strange, but I guess I have to find a CPA.