RE: Nonresident Sch C income Form 1099 NEC

[thewhetsells]

I provide consulting services, 100% physically performed from my full time, full year residence in St Louis, Missouri (MO), to a county government located in West Virginia(WV). The income is reported to me on Form 1099 NEC. No state income tax is withheld in box 5, but a WV state payer’s number is in box 6, and state income is in box 7. I report this income to the IRS as a sole proprietorship on Sch C. This income is about $10,000/yr.

MO individual resident tax code is clear that any income derived from services physically performed in MO is MO sourced and MO state taxes are due. WV individual nonresident tax code seems ambiguous, stating that taxes are due on income “derived from or connected with WV sources”, such as “a business carried on in this state”.

Do I owe state income taxes in WV?

[Hal_Al · Accepted solution]

Q. Do I owe state income taxes in WV?

A. No.  As you correctly stated, that does not constitute WV source income.  The rule is the same in almost all states (CA being a notable exception). 

You may hear from the WV Tax Division because your client erroneous put that info in boxes 6 & 7 of the 1099-NEC.  It's probably just something the client  routinely does.  You'll just have to explain it at that time.