SIMPLE QUESTION RE: NJ INCOME TAX FOR TOTAL NON-RESIDENT

Posted by diy397 on April 12, 2007, 12:25 am

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In scanning all the groups, I see no one has asked about the
NJ state income tax liability, if any, for 100%
non-residents (never set foot in NJ) who are paid by
NJ-based firms.

I live in a non-income tax state, so state income tax credit is not
part of the picture.

I am a 1099 worker for an NJ-based firm, though I have other
clients. I work purely over the internet.

In calling NJ Tax authorities, I get the answer that NJ
source means NJ tax.

But many postings over the internet say that various laws
and court decisions are contrary to this.

The experience of a knowledgeable person is appreciated.

Moderator:
The source of your income is where you lived when you
earned the income. But NJ may have different rules.

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Posted by Katie on April 13, 2007, 3:11 am

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diy...@adelphia.net wrote:

> In scanning all the groups, I see no one has asked about the

> NJ state income tax liability, if any, for 100%

> non-residents (never set foot in NJ) who are paid by

> NJ-based firms.

> I live in a non-income tax state, so state income tax credit is not

> part of the picture.

> I am a 1099 worker for an NJ-based firm, though I have other

> clients. I work purely over the internet.

> In calling NJ Tax authorities, I get the answer that NJ

> source means NJ tax.

> But many postings over the internet say that various laws

> and court decisions are contrary to this.

> The experience of a knowledgeable person is appreciated.

> Moderator:

> The source of your income is where you lived when you

> earned the income. But NJ may have different rules.

Actually, the general rule is that the source of income from
personal services is the place where the services were
performed -- not the residence of the taxpayer. (The state
of residence generally taxes ALL income, regardless of
source.)

NJ follows that rule. Although your services were performed
for the benefit of a NJ client, you have no NJ source income
unless you spent some part of the time performing those
services in NJ.

Presumably you are self-employed and file a Schedule C. If
you performed any part of your work for your NJ client in
NJ, you may be required to apportion part of your net income
from that business to NJ. If, as you say, you never set
foot in NJ, you have no NJ source income.

Katie in San Diego

Modeartor:
Point well-taken! I was thinking of telecommuting services
and not the big picture.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>