Do I need to file a NY state tax return as a non-resident of NY if I have only $4500 of 1099-NEC income from a NY company (no taxes withheld)? Std NY deduction is $8000.

[user04265]

I'm a fulltime resident of Utah with Utah W-2 wages and Utah 1099NEC income.  I never set foot in NY state in 2020

[LinaJ2020]

It depends.  If you are a New York State nonresident, you must file Form IT-203, Nonresident and Part-Year Resident Income Tax Return, if you meet any of the following conditions:

• You are a nonresident with New York source income and your New York adjusted gross income Federal amount column (Form IT-203, line 31) exceeds your New York standard deduction.
• You want to claim a refund of any New York State, New York City, or Yonkers income taxes withheld from your pay.
• You want to claim any of the refundable or carryover credits available.
• You had a net operating loss for New York State personal income tax purposes for the tax year, without having a similar net operating loss for federal income tax purposes.

For details, click here: https://www.tax.ny.gov/pit/file/nonresidents.htm

[user04265]

Instructions for IT-203 indicate that NY source income for nonresidents is "the sum of income, gain, loss, and deduction from services performed in New York State (which does not apply to me since I did not set foot in NY State so I didn't perform any services there) or from a "business, trade, profession, or occupation carried on in New York State (which I don't think applies to me since my business is based in Utah and I never carried on business in NY State, never performed services there, and never even set foot in NY State.)  Can I simply file Utah State tax return and treat the $4500 as income generated by my Utah-based business? 

If you do recommend that I file a NY IT-203, what do I list as my NY State amount for "Business income or loss" (line 6 NY State amount)?  My Federal amount for Business income or loss (line 6 Federal amount)  is $72 (Schedule C, 1040) because of business-related deductions. 

Thanks for your help. 

[ErnieS0]

Whether or not you need to file a non-resident New York income tax return would depend on what type of services you performed for the company that issued you a Form 1099-NEC to determine whether it is NY source income or not.

[user04265]

In response to ErnieSO, I drafted a template for a legal agreement that could be used by the NY organization.  The terms of the document were based on my previous experience drafting similar agreements for Utah-based organizations in the same industry.  Communication with the NY organization was conducted via email and phone calls with a Utah-based consultant who was working for this NY organization.  I did not travel to NY.  I don't have an office in NY.  I have other Utah clients who have paid me with 1099NEC income.  Do I need to file a NY State return?

[user04265]

NY source income seems to be defined as "income for services provided in NY State" (I was never in NY State so my services were not performed in NY State) or income from a "business that carried on in NY State."  The services that I performed (i.e., drafting a document) were performed in my Utah office.  I'm less certain about how "carried on" is defined by NY Tax Authority.  I don't carry on business in NY State.  I don't have an office in NY; I don't advertise in NY; I don't travel to NY.  I had this one-time income from NY source only because of a Utah-based colleague who referred me for this small project.  How do law firms with clients all over the country treat income from those clients?  Are they filing state tax returns in every state in which a client is located?  Or are they filing tax return in the one state in which their law office is located?  Appreciate any help with this topic.  Thanks.

[DanielV01]

@user04265  While New York is very aggressive in taxing remote work, your income that is "New York sourced" in theory appears to fall outside of their statute.  First, the income is not performed on behalf of a New York employer, nor is it earned within New York state, and you are neither a New York domiciliary or statutory resident.  Based on all you state, you simply don't file a New York return.  If New York claims that the income is taxable to New York state, you will present all of the evidence you state to them as proof that while you performed the work for a New York company, you did not do so sourced to New York state and you don't pay tax there.

That is the real reason why you will not file a New York return, and not that it is $4500 in question.  If the income is sourced to New York, then New York can tax the income if your overall income is $8000 or more ($16000 or more if Married Filing Joint).  But facts and circumstances are that the income is not New York sourced.  

You seem to have a legal mind, so the following link is the statutory language that New York uses to determine when income is "New York sourced":  New York source income for nonresidents