Locum Tenens Taxes in New York & New Jersey

If you're not domiciled in New York but you earn income for work physically performed in New York, that income is New York-source income, and New York taxes nonresidents on it. The mechanism for reporting this is Form IT-203, Nonresident and Part-Year Resident Income Tax Return.

The trigger isn't about how many days you worked or how small the assignment was. It's about whether you earned income sourced to New York and whether your total income, combined with your New York-source income, crosses New York's filing thresholds. For a working physician earning six figures from any combination of sources, that threshold is essentially always met. A two-week locum block at a hospital in Buffalo or a per-diem shift pattern at a facility in Westchester both create a New York filing obligation.

For 1099 locum income specifically, New York sources the income based on where you physically performed the services, not where the staffing agency is headquartered and not where you live. If you're credentialed at a New York facility and you're physically on-site delivering care, that income is New York-source income regardless of how your contract is structured.

The mirror-image rule applies if you live in New York and pick up assignments in New Jersey, or if you live outside both states entirely and work a New Jersey locum contract. New Jersey taxes nonresidents on income earned from services performed within the state, reported on Form NJ-1040NR, New Jersey Nonresident Income Tax Return.

As with New York, the New Jersey filing obligation is driven by New Jersey-source income crossing the state's nonresident filing threshold, not by assignment length. A locum physician covering shifts at a hospital system in Hackensack, Newark, or anywhere else in New Jersey needs to account for that income on a New Jersey nonresident return, separate from whatever they owe their resident state.

This is the question that trips up more locum physicians in this corridor than any other. New York City imposes its own local resident income tax on top of New York State tax, and it's a real, meaningful additional bracket, which is exactly why physicians assume it must apply to anyone working within city limits.

It generally does not. NYC's local income tax is a resident tax, meaning it applies to people who are domiciled in New York City or who maintain a permanent place of abode there and meet the city's residency day-count test. It is not a tax on where you work, and New York City does not currently impose a separate commuter or nonresident earnings tax on people who simply work within the five boroughs without living there.

In practical terms: a locum physician who lives in New Jersey (or Westchester, or Connecticut, or anywhere else outside the five boroughs) and works shifts at a Manhattan or Brooklyn hospital pays New York State nonresident tax on that income via Form IT-203, but does not pay NYC's additional local resident tax on it. The city tax only turns on where you live, not where you clock in.

Every state that imposes an income tax, including both New York and New Jersey, provides a mechanism so its own residents aren't taxed twice on income they already paid tax on to another state. This is the resident-state credit for taxes paid to another jurisdiction, and it's the piece that keeps a NY/NJ locum physician's overall tax bill from simply stacking both states' full rates on top of each other.

The mechanics work in a specific order. First, you file a nonresident return in the state where you worked, reporting only the income sourced to that state, and you pay that state's tax on it. Second, on your resident-state return, you report your full income, including the income you already paid nonresident tax on, and then you claim a credit for the tax paid to the nonresident state.

The catch is that the credit is generally capped at what your resident state would have charged on that same income, not the full amount you actually paid the nonresident state. If the nonresident state's rate on that income is higher than your resident state's rate would have been, you don't get a refund of the difference. You've effectively paid the higher of the two rates on that slice of income, with no additional tax owed to your resident state, but no credit for the excess either.

Illustrative example, not a specific client outcome. To show how the resident-credit mechanic plays out with a physician who splits time outside the immediate NY/NJ pair, consider Dr. Alvarez, who is domiciled in Pennsylvania and takes locum assignments in both Pennsylvania and New York over the course of a year. She earns $260,000 in total 1099 locum income: $160,000 for work physically performed in New York, and $100,000 for work physically performed in Pennsylvania.