1099 NEC from different state

[aramirez]

I am a freelance translator and reside in Texas. I received a 1099-NEC from Indiana as I do freelance translations for clients in Indiana. All work is done through email. Do I need to file an Indiana State Tax return?

[LeonardS]

No, you do not have to file an Indiana State tax return.

[aramirez]

Thank you. 

I just found this and was wondering if the answer would still be the same.

"

• If you were a full-year nonresident of Indiana, but received any income from Indiana sources, you must file your Indiana income taxes.

Full-year nonresidents who received income from Indiana sources must file an Indiana individual
income tax return (Form IT-40PNR). They are subject to tax on that part of their total federal
income that is derived from or connected with Indiana sources.

Income received from Indiana sources is considered Indiana income to nonresidents, except certain
types of Indiana source income subject to tax only by the taxpayer’s state of legal residence.
Interest, dividends, royalties, and gains from the sale of capital assets are subject to tax only by the
taxpayer’s state of legal residence unless such income results from the conduct of a trade or
business in Indiana. If a trade or business is conducted in Indiana, the income should be reported
as Indiana income"

I am wondering if the translation would fall under Indiana source since the translation jobs are requested by people Indiana and the service is then provided to them, hence a service is provided to people in Indiana. I hope this makes sense! 

[TeresaM]

In general, W-2 work or self employment work is taxed where it is performed.  Since you are self-employed, if your business is listed in the state of Texas, you should not owe taxes to other states because you have clients there. If you travel to another state and perform services there, that may be a case where you would need to file a non-resident return to that state.

Since people have been working from home so much during the last couple of years, some states are trying to tax remote workers in other states. For instance, New York had legislation to do so and there are several lawsuits from their neighboring states, so it is not as definite as it used to be. However, it would take specific changes for Indiana to do that and I do not see mention on its tax website. Since you are a freelancer, it is especially unlikely this would apply, as your business is in Texas and you happen to have a client in Indiana.

 

[aramirez]

Great, thank you for the information!

I found this before I saw your response. So regardless, as you mention, it would not fall under (2), (3), or (4) below, correct? Because I was in Texas the whole time and it does not matter that clients were from Indiana?

"(a) With regard to corporations and nonresident persons, "adjusted gross income derived from sources within Indiana", for the purposes of this article, shall mean and include:

(1) income from real or tangible personal property located in this state;

(2) income from doing business in this state;

(3) income from a trade or profession conducted in this state;

(4) compensation for labor or services rendered within this state; and

(5) income from stocks, bonds, notes, bank deposits, patents, copyrights, secret processes and formulas, good will, trademarks, trade brands, franchises, and other intangible personal property to the extent that the income is apportioned to Indiana under this section or if the income is allocated to Indiana or considered to be derived from sources within Indiana under this section."

I also have another 1099 NEC from Maine that I received because I was a guest speaker for a college. In that case, I was in Maine for 2 days. Would it be the same situation in not needing to file a Maine State Tax? 

I also found this on their website, " Anyone who is not a resident of Maine, but performs personal services in Maine for more than 12 days and earns more than $3,000 of income from all Maine sources, must file a Maine return. Up to 24 days performing certain personal services, such as training and site inspections, are not counted against the 12-day threshold."

Sorry I just want to be sure! Thank you! 

[ErnieS0]

No. You do not have to file a Maine income tax return because you did not have a temporary business presence in Maine for more than 12 days during that taxable year and earned or derived in excess of $3,000 of gross income during the taxable year from contractual or sales-related activities.

18-125-806 Me. Code R. § 02

[aramirez]

Thank you for your response! I appreciate it!