It depends. Missouri is admittedly not very clear in its definition of Missouri-source income. Its general definition is that Missouri-source income is income that is derived from Missouri or that is earned while living in Missouri. You were not living in Missouri at the time you received the income. The question is whether the income is derived from Missouri.
If you were still working for the employer the answer would be yes. You are no longer working for that employer, but the non-compete income does have at its root the employment. So, too, would unemployment benefits and pension income, but unemployment and pension income is no longer taxed in Missouri once you move to another state and continue receiving the benefits in the other state. Those sources of income, however, do not come from your employer, while this non-compete payment does.
Based on this and how vague the Missouri law is written, I believe you would do well to file a Missouri return. You could choose to include the income and pay Missouri tax on it. That would be a conservative and safe approach. If you feel that the income should not be taxed in Missouri, file a return that zeroes out the income. This would be a way of acknowledging that you received the income. Then, attach a statement disclosing why you are not including the income as part of your Missouri return. This way, if Missouri has another interpretation, you should avoid penalties for not having filed the return in the first place.
Still, you can choose to not file at all for Missouri. That action is okay if Missouri does not consider your income to be Missouri-sourced. But, if you decide not to file and are wrong, Missouri will assess penalties and interest for neglecting to file and not paying on time.
I believe the decision is up to you, and the law is not perfectly clear, but I hope this information can assist you to make a good choice on your Missouri return.
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