Freelance IRS Tax Question...

mparis

Finished up my first contract work last year and I'm doing my taxes, bit confused though, here's my problem:

I'm a resident of California, I started a contract job for a company while I was in Pennsylvania visiting my parents, but the company is based in Minnesota.

No tax was taken out of my checks, which I received while in PA. The 1099-MISC the company sent me has my parent's PA address on it, as well as the company's MN address.

So which state do I pay taxes to on the work? PA? MN? or CA??

Also, to make things a touch more confusing I'm using Turbo Tax to do taxes with and they ask what state I recieved money in other than CA. Do I just put PA, or do I put MN, for where the checks originated from?

Sorry if these seem like simple questions but I'm still pretty new at this

JakeM

You say were visiting your parents? So it wasn't your permanent residence at the time? If you were a legal resident of California, regardless of where you were physically located when you made the money, the State of California is probably going to expect you to file with them. On the other hand, depending on the circumstances, Pennsylvania might also come after you.

Most states will give you a tax credit for taxes you've paid in another state, so what you might end up having to do is first pay the income tax in whichever state has the lower rate, and then pay the difference between the two rates to the second state (who should give you a credit for what you paid to the other state).

The best advice I can give you is to not follow any of the advice given to you here (I know, a catch 22 ). Find someone who does this shit professionally. You might end up having to pay someone to do it for you. Filing a 1099 is enough of a pain in the ass already, but when you bring two states into the mix... sheesh. I don't know, maybe someone else here will actually be able to help you.

Jesse Moody

when you filled out your w9 what was your address?

That is where you file.

If you filed more than one w9 with your address and the company you did freelance for then you need to figure out how much you made in each state, etc.

TomDunne

You pay taxes in the state you maintain your primary permanent residence, which would be California. Lots of people have jobs that keep them away from their primary residence (actors, athletes, politicians, etc) but a Hollywood actor working on location in NY is still a California resident, a Florida athlete playing ball in Texas is from Florida, etc.

The address you receive paperwork at isn't important. In my case, I'm right along a state border, living in Kentucky but working in Ohio. Despite working in Ohio for an Ohio employer and doing freelance work exclusively for Ohio clients, my state taxes are paid to Kentucky. I have all my tax paperwork sent to the office, including 1099s for freelance work, rather than to my home address. As long as you legitimately maintain a primary California residence, it doesn't matter where your files are sent - you're still a Californian.

As an aside, did you pay any quarterly taxes on your earnings last year? if so, what state did you send those taxes to?

mparis

TomDunne wrote: »

You pay taxes in the state you maintain your primary permanent residence, which would be California. Lots of people have jobs that keep them away from their primary residence (actors, athletes, politicians, etc) but a Hollywood actor working on location in NY is still a California resident, a Florida athlete playing ball in Texas is from Florida, etc.

The address you receive paperwork at isn't important. In my case, I'm right along a state border, living in Kentucky but working in Ohio. Despite working in Ohio for an Ohio employer and doing freelance work exclusively for Ohio clients, my state taxes are paid to Kentucky. I have all my tax paperwork sent to the office, including 1099s for freelance work, rather than to my home address. As long as you legitimately maintain a primary California residence, it doesn't matter where your files are sent - you're still a Californian.

As an aside, did you pay any quarterly taxes on your earnings last year? if so, what state did you send those taxes to?

I didn't pay any quarterly taxes on the pay received from this company.

Thanks again for the help everyone.

Jesse, I didn't fill out a w9, just a work for hire agreement. I received a 1099-MISC from the company.

Jake, you're probably right.

mparis

Alright well I've decided just to pay Cali the tax. It wasn't a large enough amount that I think it's required to pay out of state on.