Do I need to file MN state taxes as a nonresident if I work remotely from AZ and receive a 1099-NEC?

[thaliad]

I live in AZ and received a 1099-NEC for contracted work through my sole proprietorship from a MN company. They provide 90% of my business income. Do I need to file MN non-resident taxes for that 1099-nec? 

I wasn't sure so I did download MN & AZ states. Under Income Allocations, TT shows my and my husband's full Federal income including our W2 which does not have anything to do with MN. Do I fill in that full wages & salary amount for MN (or just the 1099-nec amount) Or do I just use the business income & loss amount since that is where my 1099-nec income is entered?

I appreciate any help.

Thank you.

[MaryK4]

If you worked in Minnesota you must file a nonresident Minnesota tax return.  The location of the company who pays you does not matter if you did not work in that state.  

[thaliad]

Thank you for the reply.

I live in AZ and I work remotely for the MN company that provided the 1099-nec. I did not go to MN or spend any time there. Does that mean I do not need to file a MN state tax return?

[MaryK4]

That is correct- in most cases (and definitely in Minnesota) you do not have to file a nonresident return unless you actually worked in that state.  (technically, a state only has jurisdiction if they carry on business activity in the state- and having employees is a concrete business activity- so employees always pay income tax to the state where they work (if that state taxes income).  States also tax residents on all income regardless of where earned, but to avoid double tax at the state level, the resident state gives a credit for the taxes paid to the nonresident state.) @thaliad