5

I need help in determining if I qualify as a non-resident in the state of California:

  • I physically work in an office in CA
  • It is a W2 job
  • My primary domicile is outside of CA
  • I spend more than half of the year outside of CA (I work from home most days)
  • On the days I do go to the office, I commute across state lines to the office.

The purpose of this question is so that I can confirm that I am not liable for state income tax. I discussed my situation with my employer, and they recommended that I mark myself as exempt from California taxes due to the fact I am not a resident and thus do not owe CA taxes.

Obviously my employer's recommendation is based on my assertion that I am a non-resident. That is what I am not certain about. From the information I can find, I believe I am indeed a non-resident, based on the criteria I listed above. How can I confirm?

1
  • 1
    Bugbear for clarity of question wording: the word 'resident' has absolutely no meaning without specifying exactly which government agency/department/entity you want an answer contextualised to. Here, implicitly, you mean "am I non-resident according to CA's FTB?". The federal IRS may have a different opinion, as may (for example) CA's DMV, when residency matters for driving purposes. Other federal agencies e.g. DHS, differ yet again (more relevant to aliens / non-citizens). Every entity defines 'resident' differently. Commented Aug 30, 2023 at 16:51

1 Answer 1

14

You're most definitely liable for CA State tax. You have income sourced to California, and California is going to want its share of it. Your residency status is irrelevant to that.

The only difference residency status makes is to income not sourced to California (your earnings while outside CA, or capital gains, etc). Anything you earned while working physically in California is sourced to California and taxed by it.

You may get credits for taxes paid in your home state, if you paid any, or get credits in your home state for CA taxes paid.

10
  • 2
    The official California page that discusses nonresident tax obligations: ftb.ca.gov/file/personal/residency-status/… Commented Aug 30, 2023 at 13:12
  • Wow! All these years I thought you only got taxed based on the state you live in. Doesn't directly affect me as I have lived and worked in the same state for ~ 36 years. But still. Commented Aug 30, 2023 at 19:07
  • 1
    It's a common misconception, but sourcing of income is not a new concept and is a critical component of tax law and tax policy. CA specifically is one of the more aggressive states when it comes to revenue collection. New York is even more so with cracking down specifically on remote work.
    – littleadv
    Commented Aug 30, 2023 at 20:08
  • 2
    To clarify: only part of the OP's income is sourced to California (i.e. wages for the days working from the CA office) and part is sourced to the OP's home state (i.e. wages for the days working from home). So if the OP is a CA nonresident, as it appears he is, the OP will need to divide their income when filing CA taxes.
    – user102008
    Commented Aug 30, 2023 at 20:17
  • 2
    It's not unusual for athletes to lose money on games played in California given how taxes are computed. Cam Newton famously paid about $137,000 in California taxes on games for which he was only paid $51,000. (California does not determine how much of your income is California sourced based on how much you were paid for work done in California for a single employer because that could be trivially evaded by, for example, allocating bonuses to non-California work.) Commented Aug 31, 2023 at 10:15

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .