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semiretired
Returning Member

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?

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?

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3 Replies
DawnC
Expert Alumni

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?

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.

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semiretired
Returning Member

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?

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

DavidD66
Expert Alumni

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?

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.  

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