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

Apr 12, 2007 1 Replies

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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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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.

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

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