New York source income

[Txinny]

I left my job in New York in May and moved to a different state. After I left, I continued to provide consulting services to my previous NY employer as a self employed contractor rather than employee. All work was done from my new state of residence, but in support of their NY business. Is the amount they provided via a 1099-NEC considered income from a New York source?

[ThomasM125]

I think you mean you provided the services to a New York company, but while you were living in another state and you provided the services in the other state. If so, it may or may not be considered New York source income. If you could have performed the services on site in New York but chose to work in the other state for  the convenience of your employer, but not out of necessity, then it is New York sourced income. In other words, if you had an option to telecommute, then it is New York source income. You can read more about that here:  New York Telecommuting Income

{Edited 2/17/23 at 10:35 AM PST}

[TomD8 · Accepted solution]

I'm not sure that the previous answer applies to your situation.

I would point out that the New York tax memorandum referred to by @ThomasM125 specifically applies to employees.  In fact, New York Tax Code Section 132.18(a), which is quoted in the memorandum, specifically states:

"If a nonresident employee . . . performs services for his employer both within and without New York State, his income derived from New York State sources includes that proportion of his total compensation for services rendered as an employee which the total number of working days employed within New York
State bears to the total number of working days employed both within and without New York State..."

As a self-employed independent contractor, you are your own employer.  Once you became located outside New York, as a self-employed individual you became neither a New York employer nor a New York employee.  Nor were your independent contractor services performed "both within and without" New York State, as the statute also requires.  

Hence my (totally unofficial) opinion is that @ThomasM125's references do not apply to your situation, and that your independent contractor income earned as a non-resident of New York is not New York source income and is not subject to New York taxation.

[Txinny]

Thanks for the reply. That’s part of the employer convenience rule. That makes it clear if you’re a remote employee.

For businesses and sole proprietors, in their tax bulletins It-620, they discuss business “carried on” in New York is defined as a NY source.

Also, in the definition of NY source income, as a nonresident sole proprietor or partnership, you carry on a business, trade, profession, or occupation within New York State if you (or your business) perform a series of acts or transactions in NewYork State with regularity and continuity for livelihood or profit, as distinguished from isolated or incidental transactions.

Ive submitted a clarification request on the NY tax site. I’ll post their response if they get back to me

[Txinny]

Just to close this out for anyone with the same issue. The NY tax office responded that as a self employed contractor based out of a different state, work done for a NY client is not  NY source income unless you were regularly required to physically work in NY to execute the contracted services