Missouri Non-resident Income taxes

[Gail in Virginia]

I have a client who was a resident of VA for the entire year.  At no time did they work IN Missouri.  However, they were hired by a Missouri company to provide services which were performed in VA for which they received a W2.  The W2 shows the entire amount of income as being both VA source and MO source income with taxes withheld for both states.  When I complete the MO NR tax return, they are paying MO taxes on that income.  Is that correct?  According to the instructions, a non-resident with MO income of $600 or more would have a liability but this just doesn't seem like it should be considered MO source income since my client was never in MO.  Since it was reported on the W2 that way, however, and tax was withheld I don't see much choice.   Any opinions for what I should do?  I can take the credit for tax paid in another state on the VA return, and will, if MO is going to keep most of the tax withheld like it is looking. 

[Lion EA]

I have this from time to time and report NO sourced income in the state where no services were performed.  I include a statement.  Usually, it goes smoothly with my client getting all his w/h back from that state.  But, sometimes it takes many telephone calls.  I'm still trying to get the rest of a MA refund for one client and RI for another from 2013.  The RI spanned two tax years (he was on a ship in international waters and didn't see payroll detail until he got home) with the first year sending his 2012 refund immediately and the second year sending a tiny 2013 refund with me still calling about the rest.  Depending on the relative tax rates, you could let the other state have their money and take the credit on his resident state.  (MA and RI didn't work out favorably for that method for my clients.)

[mircpa]

Looks like incorrect income tax withholding by employer in MO. You might have to request full refund of incorrect withholding from MO and include in income in VA & pay taxes.

[Gail in Virginia]

Thanks, all!  Turns out she did go to MO just to administer a test so they really do need to file as NR and pay the tax.  Fortunately, VA is giving them credit for everything they paid in MO so it really doesn't hurt them except to pay me to do an extra state return.  I can live with that.