Missouri Nonresident Income Tax: What You Need to Know

Missouri imposes income tax on both residents and nonresidents who earn money in the state. If you live elsewhere but work or receive income from Missouri sources, you may still have a tax obligation. Understanding these rules helps ensure compliance and avoid penalties.

Who Must File

Nonresidents with Missouri-sourced income may need to file a state tax return, depending on earnings. For 2024, nonresidents must file if their Missouri income exceeds $1,200 for single filers or $2,400 for married couples filing jointly. These thresholds can change, so checking the Missouri Department of Revenue’s latest updates is important.

Nonresidents must also file if Missouri tax was withheld from their earnings, even if their total income falls below the threshold. This allows them to claim a refund for any excess withholding. For example, a remote worker employed by a Missouri-based company who had state taxes deducted from their paycheck would need to file to recover any overpayment.

Taxable income includes wages earned while working in Missouri, business revenue from Missouri clients, and rental income from Missouri properties. Independent contractors and business owners with Missouri-based operations may also need to file, depending on their earnings.

Taxable Income for Nonresidents

Missouri taxes nonresidents only on income earned within the state, including wages from work performed in Missouri, business revenue from Missouri-based operations, rental income from Missouri properties, and capital gains from assets tied to Missouri sources. Unlike residents, who must report all income regardless of origin, nonresidents calculate tax liability based solely on Missouri earnings.

Investment income, such as interest and dividends, is generally not taxable for nonresidents unless it comes from a Missouri-based business or partnership. For example, dividends from a Missouri corporation are typically not taxed unless the nonresident actively participates in the business. Capital gains from selling stocks or bonds are not taxable unless tied to a Missouri partnership or LLC in which the nonresident is involved.

Missouri also taxes income from pass-through entities, such as S corporations and partnerships, if they operate in the state. Nonresident partners or shareholders must report their share of Missouri-source earnings. If the entity withholds Missouri tax on their behalf, they can claim that amount as a credit when filing.

Allocating Earnings

Nonresidents must allocate income based on where it was earned to ensure only Missouri-sourced earnings are taxed. This is particularly important for those working in multiple states or earning income from various locations.

Salaried employees who split their work between Missouri and other states typically use the duty-day formula. This method divides the number of days worked in Missouri by total workdays in the year, then applies that percentage to total earnings. For example, if someone worked 50 days in Missouri out of a 250-day work year, 20% of their wages would be considered Missouri income. Employers usually track this data, but individuals should keep their own records.

Freelancers and independent contractors allocate earnings based on where services were performed. If a project was completed entirely in Missouri, the full payment is taxable in the state. If work was done across multiple states, income should be divided proportionally based on time spent or revenue earned in Missouri. Contracts, invoices, and work logs can help substantiate these allocations in case of an audit.

Business owners and partners in multi-state operations must determine the portion of their income attributable to Missouri. The state generally follows an apportionment formula that considers payroll, sales, and property within Missouri. A business with 30% of its total sales occurring in Missouri would typically allocate 30% of its net income to the state. Apportionment rules vary by business type, so checking the Missouri Department of Revenue’s latest guidance is advisable.

Filing Requirements

Missouri nonresidents must complete Form MO-NRI along with MO-1040 to report Missouri income. This ensures only Missouri-sourced earnings are taxed and allows taxpayers to claim deductions or credits that may reduce liability.

Missouri uses a progressive income tax system, with nonresidents subject to the same tax brackets as residents. For 2024, the top rate is 4.5% on taxable income exceeding $8,968. These rates apply only to Missouri-source income, so accurate allocation is important to avoid overpayment or unexpected tax bills.

Electronic filing is encouraged for faster processing and direct deposit refunds. Taxpayers can file through the state’s online portal or authorized third-party providers. Paper returns are accepted but take longer to process. Those expecting refunds should verify withholding amounts to determine if they qualify for a refund or owe additional payments.

Reciprocity with Other States

Missouri has reciprocity agreements with Illinois and Kentucky, allowing residents of these states who earn wages in Missouri to pay income tax only to their home state. This prevents double taxation and eliminates the need to file a Missouri nonresident return for wages.

To claim reciprocity, eligible taxpayers must submit Form MO W-4C to their Missouri employer, certifying residency in a reciprocal state. This prevents Missouri tax from being withheld from their paycheck. However, reciprocity applies only to wages, not self-employment income, rental income, or business profits. Individuals with non-wage income from Missouri sources must still file a Missouri return and pay applicable taxes.

Available Payment Options

Missouri offers multiple payment methods for nonresidents who owe state income tax. The Missouri Department of Revenue’s online portal allows electronic payments via direct bank transfer, credit card, or debit card. Credit card transactions may incur convenience fees.

For those preferring traditional methods, Missouri accepts paper checks or money orders, which must be mailed with a completed Form MO-1040V payment voucher. Payments should be sent well before the deadline to avoid late fees. If a taxpayer cannot pay the full balance by the due date, Missouri offers installment agreements. To qualify, individuals must submit a request and follow the agreed payment schedule to avoid additional penalties or interest.

Extensions and Deadlines

Missouri follows the federal tax filing deadline, requiring nonresident returns to be submitted by April 15. If the deadline falls on a weekend or holiday, it moves to the next business day. Taxpayers needing more time can file Form MO-60 for a six-month extension, shifting the deadline to October 15. However, this extension applies only to filing, not to tax payments.

To avoid penalties, taxpayers must estimate and pay any expected tax liability by the original April deadline. If less than 90% of the final tax due is paid, Missouri may assess late payment penalties and interest. Those granted a federal extension automatically receive a Missouri extension but must attach a copy of their federal extension request when filing.

Penalties and Consequences

Failing to comply with Missouri’s nonresident tax requirements can lead to financial penalties. Late filing incurs a penalty of 5% of the unpaid tax per month, up to 25%. If taxes are not paid by the due date, an additional 5% late payment penalty applies, along with interest at the state’s annual rate, which is adjusted periodically.

Neglecting to file can result in tax liens, wage garnishments, or legal action by the Missouri Department of Revenue. If the state determines a taxpayer intentionally avoided filing or underreported income, additional penalties for fraud or negligence may be imposed. In cases of substantial underpayment, Missouri may conduct an audit, requiring documentation to support income allocation and deductions. Keeping accurate records and ensuring compliance with filing and payment obligations can prevent these consequences.