DMarkM1
Expert Alumni

Self employed

In the NY return or any of the state returns for that matter there would be no wages to allocate in the state if there were no forms W2.  Since there were zero wages and zero wages to NY the tax will be zero until you allocate an income source to NY.

 

Using NY as an example, as you progress through the "Income" section pages,  you will see the chance to allocate to NY any income by the source.  So eventually, you will see your business income from Schedule C, for example.  You will allocate to NY the part of that Schedule C income that was earned in NY.    

 

The business income presented is net income so business expenses, if any, have been accounted for.  If there were business expenses, I suggest you use a proportion method to determine what part of the net income belongs to each state.  Divide the gross income earned in NY, for example, by the total gross income on your Schedule C.  Multiply that proportion by your total net income shown to arrive at the part of net Schedule C income that belongs in NY.

 

Additionally, if your resident state has an income tax, resident states tax income no matter where it is earned.  That sets up double taxation.  To mitigate that double taxation you should be able to claim a credit on that resident return for taxes paid to another state (total taxes paid to other states).   Work the non-resident returns before the resident return and the income taxed and tax liability for those states will carry to your resident return as needed to calculate the credit. 

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