topic Re: Is income earned on a 1099 NEC from out-of-state entity taxable by state where service provid... in State tax filing

Is income earned on a 1099 NEC from out-of-state entity taxable by state where service provided if contractee is also out-of-state resident?

semiretired — Thu, 29 Feb 2024 18:37:38 GMT

I do part time contract work for a company based in Utah, and received a 1099 NEC for an assignment where I worked in Virginia. My full time residence is Florida. Do I have to pay Virginia income taxes? There is no record that I can see where Virginia Dept of Revenue receives information on me since the Virginia entity for whom I did the service pays the Utah contracting company. Unless that contracting company has to report to every state from which it received income for its contracts and names the contractee?

Re: Is income earned on a 1099 NEC from out-of-state entity taxable by state where service provid...

DawnC — Thu, 29 Feb 2024 19:07:41 GMT

Maybe, if the income is Virginia sourced, you would file a non-resident return for VA, if required. How to file a non-resident return.

Filing requirements for VA nonresidents:

you are a resident of Virginia, part-year resident, or a nonresident, and
you are required to file a federal income tax return, and
you have Virginia adjusted gross income equal to or greater than the amounts below:

Filing Status Income Threshold

Single or married filing separately $11,950

Married filing jointly $23,900

You are not required to file if you don't owe any taxes and will not receive a refund. Don't file the return in this situation. Normally, your resident state will give you a credit for taxes paid to another state. However, since FL does not tax income tax, there is no credit available.

The issuer reports 1099-NEC income to both the IRS and to the State's Department of Revenue.

Taxable income from Virginia sources includes "income from the practice of a trade or business in Virginia" and includes, but is not limited to, wages and salaries earned while in Virginia, income from a business operating in Virginia, rental income from a property in Virginia, etc.

Re: Is income earned on a 1099 NEC from out-of-state entity taxable by state where service provid...

semiretired — Thu, 29 Feb 2024 22:18:07 GMT

OK thanks for that.

However, I asked the issuer issuer of the 1099 to use my PLLC (an S Corp with me as the single shareholder). So does my S Corp have to file the Virginia state tax in that case?

The S Corp issues me a K1 that I use in my personal return of course. It also gives me a W2 as the only employee/officer of course. I don't think any of that matters but added the info in case you were wondering.

Thanks

Re: Is income earned on a 1099 NEC from out-of-state entity taxable by state where service provid...

DavidD66 — Thu, 29 Feb 2024 23:30:22 GMT

You need to file a Virginia Non-Resident return for your S-Corp, and issue yourself a Virginia K-1. You performed services in Virginia, so the income is taxable by Virginia.