I wrote this on behalf of my son in order to ask a question regarding his New York State income taxes for the year ended December 31, 2024. My son is a resident of California and a nonresident of New York. He worked a total of 16 weeks as an independent contractor in mid-2024 providing film editing services to a New York based company. My son spent the first 4 weeks working at his home in California, followed by 10 weeks in the New York office of his New York client, followed by an additional 2 weeks at his home in California. This is the first time my son has worked in New York or for a New York company, and it is probably the last time he will do so.
It is my understanding that my son’s earnings from his work within New York providing services to his New York client as a nonresident independent contractor, is New York source income and therefore New York taxable income. My question is as follows: Are my son’s earnings from working at his California home, providing services to his New York client as a nonresident of New York and as an independent contractor, New York source income and therefore New York taxable income?
I would greatly appreciate assistance in answering my question and resolving this issue. What follows are summaries of my inconclusive research regarding this question / issue.
The New York Convenience of the Employer Rule seems to indicate that my son’s earnings while working at his home in California for a New York company are New York source income and therefore New York taxable income. However, the rule’s name implies that it is applicable to an employee and employer relationship. Therefore, I assume that the rule is not applicable to my son, because he was an independent contractor working for a business client and was not an employee working for an employer. But I do not know if my assumption is correct. Note: Although I believe the following are not applicable to my son [because he worked as an independent contractor and not as an employee], he did not work at his home in California because of any necessity of his client, nor did he have a “bona fide employer [home] office”.
Both the New York Tax Bulletin IT-615 “New York Source Income of Nonresident Individuals… “ and the Instructions for Form IT-203 “Nonresident and Part-Year Resident Income Tax Return” contain the following item on a list of New York source income of nonresident individuals: (1) services performed in New York State. However, the lists do not contain the following item as being a New York source income of nonresident individuals: (2) services performed outside New York State for a New York State business or company. That seems to indicate that the second item above is not New York source income. Therefore, it appears that my son’s earnings while working at his home in California are not New York source income and therefore not New York taxable income. But I do not know that for certain.
Then there is the New York Tax Bulletin IT-620 “New York Source Income – Sole Proprietorships and Partnerships”. My son’s occupation is that of a film editor. In the tax year ended December 31, 2024, he worked in California as an employee, not as a sole proprietorship / independent contractor, both before and after providing his services as an independent contractor to his New York client for 16 weeks. The New York Tax Bulletin IT-620 seems to be applicable to an individual who works continuously as a sole proprietorship. Therefore, it appears that it is not applicable to my son. But I do not know that for certain.
The New York Tax Law Section 631 – “New York source income of a nonresidential individual” says that the New York source income of a nonresident individual includes net amounts of income, gain, loss and deduction…. “derived from or connected with New York sources” of a business, trade, profession or occupation carried on in New York State. However, I have been unable to find a definitive answer as to whether or not “derived from or connected with New York sources” specifically includes income earned by a nonresident of New York who is an independent contractor working outside of New York, providing services to a New York based business or company.
