What is Source Income?
Income attributed to a specific state or country based on where the work was performed or where the income-producing asset is located.
Definition
Source income refers to income that is attributed to a particular state or country based on where the services were performed, where the property is located, or where the business activity occurred. Even non-residents may owe state taxes on income sourced to that state. For example, rental income from California property is California-source income even if the owner lives abroad. Understanding source rules is crucial for expats with US-based income streams.
Who Needs to Know This?
Non-residents with income from activities, property, or services in a specific state. US expats who retain US rental property, business interests, or perform work while visiting the US.
Key Deadline
Non-resident state returns due per state deadlines, typically April 15
Potential Penalties
Varies by state; penalties for failure to file non-resident return on source income
Related Forms
Common Mistakes to Avoid
- 1Not filing non-resident state returns for rental income
- 2Not knowing that work performed while visiting the US creates source income
- 3Confusing source income rules between federal and state levels
- 4Not allocating multi-state income correctly
Related Terms
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