I work remotely for a company in another state, from whom I received a 1099-MISC. Do I pay taxes to that state or just to the state I'm living in?

[foreverconfused]

I have similar situation - I live in Missouri and worked remotely for a company in NY but never went to NY physically. What are the laws surrounding this? do I have to file NY state tax or just Missouri? 

[KathrynG3]

You prepare the state return for the states from which you earned the money.  But, New York taxes income that was sourced from New York. 

Click the link for details on how to enter a nonresident state return.

For more detailed instructions, consult the resources below:

2019 Form MO-1040 Instructions

You will be filing Form MO-CR if New York tax was withheld, per page 9 of the MO-1040 instructions.

2019 Form IT 203 New York Nonresident and Part-Year Resident Income Tax Return

Please see this resource for deadline updates:

The Tax Deadline Delayed: What to know about Coronavirus COVID-19 and your Taxes and State Tax Updat...

[Edited 3/24/2020 | 11:44 AM PST]

@katie-turnbloom 

@benindc83 

@foreverconfused 

[benindc83]

Bill,

This is helpful, but I notice you say "Note that for employees, this typically means that you create a ratio of days spent in Oregon divided by total work days and apply that ratio to your annual salary, this is reported in Oregon."

This situation applies to me, but I'm a CONTRACTOR, not an employee.  I receive 1099's, not W-2's, and the payer/firm is in Michigan.  Would what you are saying still apply?  Would some self-employment tax be owed to Michigan based on the ratio of days spent there to my home state where I am domiciled?

[KrisD15]

Self-employment tax is not paid to any state, that is your FICA (Social Security) tax. 

If your schedule C income was earned in Michigan, you would need to claim that gain on a non-resident Michigan tax return. 

You would need to allocate the income by using a logical formula of the time in the state, and the profit earned on that revenue. 

Keep a record with your tax files of how you determined the income you allocated to Michigan. 

Any Schedule C income from a Michigan source while NOT physically in the state of Michigan would not be claimed. 

Any Michigan tax due may be a credit claim-able on your resident state return, depending on that state.  

Michigan Income

"You must file a Michigan Individual Income Tax return and pay tax on salary, wages and other employee compensation for work performed in Michigan."

[achmilrelo]

Hi, 

So I am trying to understand my situation, which has been complicated by a temp location while we are closed due to COVID. 

I lived and worked in OR the last 18 months, then within the same company I took a position that required relocation to a new region on the east coast. I started the job on 2/10, but had to wrap up in Oregon, pick a new city, etc, so worked mostly remotely, sometimes in in person on trips for a month. On 3/17 I had my things packed and stored, but instead of going into temp housing in Pennsylvania, I decided to wait out the corona crisis and work remotely from Michigan with family (everyone is working remotely at this point) until we reopen. My paystub hasn't changed to reflect the new location, and we aren't 100% certain if and when we will open back up.

So, all that to say, should I be updating my  tax withholdings to include PA? Even if I do not live there yet? 

On top of all of this, we are being furloughed, so will have to figure out where to file for unemployment. 

[JohnW222]

@achmilrelo

From what you’re saying, it doesn’t sound like you’ll need to have Pennsylvania withholding taken from your paycheck, because you won’t need to file a Pennsylvania return. 

That said, please see the Pennsylvania Department of Revenue page Who must file a Personal Income Tax return? for more information, just to see the issues involved and decide for yourself.

[mlizbar]

Hello, does it make a difference if you are a single-member LLC working remotely for a California client?

Thank You

[DaveF1006]

According to this trusted Turbo Tax source, you only have to file a tax return in a state where you are either physically living or working, But your short answer is that no, you don't need to file a tax return or pay taxes in the state where your company is located or headquartered.  You only have to file and pay taxes in your home state of residence (where you are working for your employer remotely). 

[1099erGirl]

Unfortunately this isn't true for CA now. I tried to post an explanation and for some reason the message board keeps removing it. Look up CA sourced income threads for updates as of Sept 2019. 

[learning108]

So question: I'm technically still a resident in NJ but had been living in CA and receiving social services there, was trying to transition here but don't have a permanent address. I work for an online business.

Do I just file in NJ (And federal)?

What do I do about the piece where I'm receiving government assistance in CA as a non-resident, technically? Do I still need to file in CA? Will the federal tax return automatically end up in the information of social services in CA? I'm very confused about what parts of government talk to what parts of government about what.

[JotikaT2]

It depends.

It sounds like you are a part-year resident for both New Jersey and California since you indicated you moved to California and have been living in California.

If your intent is to stay in California, you would be considered a resident of California.  You would not file as a nonresident if this applies to you.

How you file will depend upon your answer to the statements above.

Assuming you are a part-year resident of New Jersey and California, you will report your income based upon the state source of the income. 

For any income that is earned from New Jersey sources while you are residing in California, you will be able to claim a credit for taxes paid in the other state to ensure you are not taxed on the same income twice.

This credit would be calculated in California under the credits section of the state interview section.

[Rae2020]

I live in Colorado and I work remotely for a company in Minnesota.  I have not traveled to Minnesota for work during 2019.  I understand that my state taxes should be paid to Colorado and I should file a state return with Colorado.  However, my employer reported state taxes for me to Minnesota, which is reflected on my W-2.  How do I correct that for 2019?

[maglib · Accepted solution]

@Rae2020 Colorado as your home state taxes all income.  Colorado residents can claim a credit for the taxes paid to the other state. [§39-22-108, C.R.S.] The credit is limited to the smaller of the Colorado tax calculated on the income from sources in the other state or the actual tax paid to the other state on such income.

You will need to do your Minnesota non-resident return first. As you did not live in Minnesota. If you only telecommuted and never actually had to be in Minnesota for visits, you should get a refund of all the taxes paid.

Nonresidents who telecommute may need to apportion their income based on the number of days they work from home. For Minnesota in-come tax purposes, nonresidents will need to divide the number of days worked in Minnesota by the total number of days worked.

When you do your colorado return, you will get a tax credit. TT handles this very nicely.

Make sure in the personal interview you answer the questions about working out of state.

you will need to contact your employer for the fact you live and telecommute elsewhere. Do note many employers are not set up to withhold taxes from all states, and you may have to pay estimated taxes to Colorado to ensure you have proper payments.

Good luck.

[TomD8]

@Rae2020 --  Since your income is not subject to MN taxation, you should submit a non-resident MN return, showing zero MN income, in order to have the incorrectly withheld MN taxes refunded to you.  It then follows that you would not claim an out-of-state credit on your CO return, because in the end you will not be paying any tax to MN.

My own suggestion would be to file the MN return on paper, along with a note explaining that you neither lived in nor worked in MN in 2019, and that MN taxes were incorrectly withheld.  If you e-file the return, there's a chance it may be auto-rejected because of the discrepancy with your W-2.

[adamovichtaxes]

Hopefully my message will reach the person who's company is in California and occasionally he travels there.  Check with payroll and see if they can allocate the portion of earnings specific to CA separately from the other.  We handle interstate truck drivers and their HR departments will credit the states proportionally.  If not, check to see if they can put "statutory employee" as your designation on your job description.  Then you can allocate the funds yourself.