1099 for remote work while at college in another state

[NapNauman]

My daughter goes to school in IN but her permanent residence is IL.  She worked remotely for an internship as a 1099 contractor while at school in IN.  The company she worked for was located in CA.  Does she need to file in IN?  Or will this be considered for her IL return since that is her permanent residence and she wasn't working for a company with a physical location in IN?

[DMarkM1 · Accepted solution]

The 1099 income earned while she was physically in Indiana is Indiana source income (reference here).  She will file as IN nonresident and allocate that income to IN.  

Being a student in IN with a permanent residence in another state allows her to file as nonresident (reference here) .  

She would also need to file as IL resident as the resident state taxes all income, all sources.  She will however, claim a credit for taxes paid to another state on her IL resident return to mitigate the double taxation.  

Complete the IN nonresident return first and take note of the income taxed and the income tax for IN.  She will then use/verify those numbers in the IL resident return for the credit.