I am a software consultant with a Nevada S Corporation that works with an out of state client. I work quite a bit from home in Nevada or about 20% of the time. However, do I pay out of state tax for being physically present in Massachusetts 75% of the time? How does the IRS treat the situation when you work partly at the client and partly at home?

ANSWER

The BIDaWIZ Team's Answer:

You would need to file a tax return in Massachusetts as a Foreign Corporation and be registered as such. You would however only be taxed on the income from Massachusetts sources. This means that if you are physically present in Massachusetts 75% of the time, the income generated during that period will be taxed. Specifically, in Massachusetts you would need to file Form 355S, a Schedule S and a Schedule SK-1. You would also need to file a non-resident personal tax return or Form 1-NR/PY.