1099 NEC and different state listed

[SMilton181]

I work in North Carolina as an independent contractor field service technician. All of my work is done on locations in North Carolina. One of my major clients facilitates communications between me and the company I do end services for, and issues my pay. They are based in Colorado.

On the 1099-NEC I received, they have box 6 listed as Colorado as state and have a Payer's state number. State income in Box 7 is also recorded. The amount is just short of $10,000.

I file State as North Carolina every year and anticipated that, since all my work was done IN North Carolina, I would be fine just filing NC state taxes. Now I am thinking that, since the person who is using my services is -technically- in Colorado, I also need to file there for the ~10,000? Is this correct?

[RobertB4444]

No.  Colorado requires remote employees to file Colorado tax returns, not remote contractors.  You can ignore the Colorado information on your 1099-NEC and file as you usually do.

[Edited 2/7/24  10:46 AM PST]

@SMilton181 

[TomD8]

@SMilton181 --

@RobertB4444 's answer is not correct.

From Colorado Code 39-22-109(b)(i)(A):

A)Telecommuting. A Nonresident employee who telecommutes from a location outside of Colorado is not working in Colorado and the employee's income from such work is not Colorado-source income.

https://casetext.com/regulation/colorado-administrative-code/department-200-department-of-revenue/di...

A non-resident of CO can only be taxed by CO on CO-source income.

If Colorado taxes were incorrectly withheld, the taxpayer should file a non-resident CO tax return, allocating zero income to CO, in order to receive a full refund.

The employer of such a taxpayer should not be withholding CO taxes.  See this:

"In general, employers are required to withhold Colorado income tax from any compensation paid to an employee who is either of the following:

• a Colorado resident; or
• a nonresident who performed work in Colorado."

Individual Income Tax Guide | Department of Revenue - Taxation (colorado.gov)

[Hal_Al]

Q. Now I am thinking that, since the person who is using my services is -technically- in Colorado, I also need to file there for the ~10,000? Is this correct?

A. No. 

California is the only state, that I'm aware of, that considers a 1099-NEC from a company located in their state to be CA source income to an out-of-state recipient, who never actually worked there. 

[SMilton181]

Thank you very much for the reply. 

In that case as I read it, since I am a contractor in North Carolina and all work was done IN North Carolina (despite the payer being in Colorado and showing state income in box 7), I should be good to include the ~10,000 as NC income for NC state taxes, and not file in CO at all (there was no withholding on it so I don't need to contact Colorado in this case).

Normally I'm pretty clear on the old MISC / new NEC forms but this is the first time I've had a payer include an out-of-state code in box 6 and a state income in box 7 on one. 

[Hal_Al]

Q.  I should be good to include the ~10,000 as NC income for NC state taxes, and not file in CO at all?

A.  Yes.