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mccoy-kelsey
New Member

1099-MISC from different state

I received a 1099-MISC for work I did long-distance as a nonresident in another state. Do I need to file a tax return for the state in which the Payee is based?
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Accepted Solutions
PaulaM
Employee Tax Expert

1099-MISC from different state

No, income earned from home (as a remote worker) would be included on your resident state return.

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10 Replies
PaulaM
Employee Tax Expert

1099-MISC from different state

No, income earned from home (as a remote worker) would be included on your resident state return.

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gettamac
Level 2

1099-MISC from different state

I live and work full time in MA. I did graphic design work in MA for a company in CA and for another company in NJ. I received a 1099–MISC from each company. Turbo Tax is telling me that I need to file for all three states. I get the filing in MA because I work FT in MA. But, everyone that I've spoken to that does graphic design freelance out of state tell me that I need to file only for the state in which the work was done. In my case, MA. I've also found multiple instances online that also suggest that I do not have to file in NJ and CA. Can someone clarify?

 

Thanks.

wjseman
New Member

1099-MISC from different state

I agree with Paula, you owe the money to the state in which you performed the work not the place that received the benefit of the work. TurboTax has no way of knowing the place of performance. I would have a different answer if you were a consultant that performed the work inside the states that you received the W2 from. 

gettamac
Level 2

1099-MISC from different state

Turbo Tax DOES know based on my inputs for the federal return. I entered the two 1099–MISCs that I received from CA & NJ. Once Turbo Tax was done "checking my federal return" and I clicked continue, it goes to the "Let's get your state taxes done right" screen. When I click continue, the next screen says "Based on the information in your federal return, it looks like you’ll need to file more than one state tax return." And then I'm presented with a screen that has MA, CA, and NJ state returns to start.

gettamac
Level 2

1099-MISC from different state

I think what you meant is that Turbo Tax doesn't know that I didn't do the work in CA and NJ. It should assume that I didn't though based on my residential address. Perhaps when I click start for CA, it'll ask me if the work performed was in/out of state. Will report back.

gettamac
Level 2

1099-MISC from different state

So, having completed that tax return for NJ it seems as though Turbo Tax is automatically pulling in my Federal entires based on the number it's showing me as the Gross Income. It told me that by importing my federal info, my state return for NJ is almost complete. Based on the number I'm looking at as the Gross Income, it's taking my entire gross income from the federal return that I completed (my MA income, my wife's MA income, my 1099 income from NJ, and my 1099 income from CA) and saying it's taxable income for NJ. Granted, it's applying a "Nonresident Adjustment to Income Tax" bringing my net tax balance to $386.00. But, it shouldn't be taxing ANY of that income above—not even the 1099–MISC income from NJ.

gettamac
Level 2

1099-MISC from different state

So, I deleted the NJ form and went straight to MA. Immediately it says:

 

"Before we get too far into your return, there's something we wanted to point out. Based on what we know from your federal return, in addition to making money in Massachusetts, you also made money in New Jersey and California. This money gets taxed twice, by both Massachusetts and each of the other states where earned. But don't worry if you see double-taxed income as you go through your Massachusetts return. Later on we'll help you get a credit that offsets paying double taxes."

KrisD15
Employee Tax Expert

1099-MISC from different state

There are 5 states that tax remote workers, and New Jersey is one of them. 

You should end up filing a New Jersey return and being taxed on the income you earned while working for a New Jersey employer or client. 

California is not one of the states. 

Do the New Jersey state tax first. That way a credit for those taxes paid (to New Jersey)  should flow to the Massachusetts state return. 

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gettamac
Level 2

1099-MISC from different state

Thanks for the info. I googled "5 states that tax remote workers" and nothing came up. What did come up was this...

 

https://tax.thomsonreuters.com/blog/state-by-state-reciprocity-agreements/

 

Looks like MA is not a state that has a reciprocity agreement with any of the 17 states that have reciprocity agreements. So, my guess is that I'll have to pay MA, NJ, and CA after all. Going to an accountant tomorrow to find out for sure. Lots of various suggestions/advice on this thread so I'm still unclear. 

DMarkM1
Employee Tax Expert

1099-MISC from different state

How did you answer the residence questions in the "My Info" section?  You should have answered that your resident state was MA and you didn't live in any other state and you didn't earn any income from any other state.  You only lived/worked in MA.  You should only be filing MA tax returns. 

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