EMPLOYER REGISTRATION

[vsundeep11]

My employer is based and registered in CA, I am working temporarily from home office in Texas from March 2020 thru March 2021 due to pandemic situation. My employer has no sales/income in Texas, nor my job has anything with sales or establishing any business in Texas. I choose Texas to be with family. Is it required for my employer to register in Texas because of my telecommuting from Texas?

[xmasbaby0]

No

[vsundeep11]

Can you please elaborate?

[xmasbaby0]

@vsundeep11 

You should really be asking about paying CA state tax in your situation, not whether your employer--who has no business ties to TX--should "register" in TX because there is one employee staying in TX temporarily.  It sounds like you have been living and working in CA until the pandemic, and have decided to ride out the pandemic in TX, while still working for a CA employer.  You do not mention if you still own a home in CA or kept an apartment there, etc. or whether you maintained CA as your domicile.  When you prepare 2020 tax return, you will not pay tax to TX since TX has no state income tax.  But CA may expect you to pay CA tax on that income, even if you are a part-year resident and a part-year "non-resident."    Is the employer still withholding CA tax from your paychecks?

@TomD8   Thoughts for this user?

[vsundeep11]

Thanks for the detailed info.

My employer insists that they need to be registered in state of TX, for me to telecommute from TX and they are not open to registering in new states. This is reason for stressing on employer registration requirement.

I took this job in February this year and had only physical stayed and worked for my employer in CA for 6 weeks, rest all was from Home office in Texas. I was planning on moving to CA from Texas, but with the pandemic and work from home being extended till March 2021. I prefer to stay in TX thru March 2021.

Paying additional taxes or saving on taxes is less of a concern for me in the current scenario. Just want to stay with the family and avoid unnecessary burden of moving to a new place during pandemic. Yes, I have a temporary leased place in CA. 

[Opus 17]

We can’t really tell you anything about the Texas laws regarding business registration. This is an income tax form.

As an income tax matter, if you live and physically work in the state of Texas, then California will not tax your income. And since Texas does not have a state income tax, then you only have to worry about paying federal taxes on your income.

There are five or seven states that may try to tax you if your employer is based in their state and you are telecommuting from another state, but California is not one of them.

[TomD8]

"I took this job in February this year and had only physical stayed and worked for my employer in CA for 6 weeks, rest all was from Home office in Texas. "

The income you earned from those 6 weeks working in CA is taxable by CA.  You will report that income by filing a 2020 non-resident CA tax return.   Income from work actually (physically) performed in CA is CA-source income, and is taxable by CA regardless of your state of residence.

As long as you remain a legal resident of TX, the income you earn for your remote work performed in TX is not taxable by CA.

Once you move to CA and become a legal resident of CA, all your income will become taxable by CA.  

As @Opus 17 stated, the business registration requirements of the state of Texas are beyond the scope of this forum, and in any case are irrelevant to your individual tax situation.

[vsundeep11]

Thanks for responses.

Can you please define "legal resident of Texas” What proves that I am legal resident in a state or otherwise?

I understand this is not a business related forum, but If I have to use my CA address for my employer purpose, payroll, taxes, etc... and still reside in Texas, is it illegal or any violation of tax laws(I understand it is foolish to pay CA state taxes when not required) Texas doesn’t have state tax for resident or nonresidents!!

[TomD8]

If your main, primary home - your domicile in tax terminology - is in Texas, then you are a legal resident of Texas.

One question: is your "employer" paying you as an employee, or as an independent contractor?  If you're not sure, ask your employer.  The answer makes a significant difference in your taxes.

[vsundeep11]

I am a fulltime employee working on W2.

[Opus 17]

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@vsundeep11 wrote:

Thanks for responses.

Can you please define "legal resident of Texas” What proves that I am legal resident in a state or otherwise?

I understand this is not a business related forum, but If I have to use my CA address for my employer purpose, payroll, taxes, etc... and still reside in Texas, is it illegal or any violation of tax laws(I understand it is foolish to pay CA state taxes when not required) Texas doesn’t have state tax for resident or nonresidents!!

---

Your domicile is your permanent home.  There is no single factor that determines where your domicile is, but some of the factors will include your main place of employment, where your family is employed or goes to school, where you are registered to vote, and where you have significant legal and social connections, like your friends, your church, your doctor and dentist, your bowling league, and so on.

You only have one domicile at a time, no matter how many different homes you might live in.  

You generally file a resident state tax return for the state you are domiciled in, that reports and pays income tax on your world-wide income, and you file a non-resident return if you are visiting or temporarily working in another state that only pays tax on that in-state income.

If you are temporarily living in Texas but your permanent home is in California, and you will be returning to California if and when your employer recalls you, then you are probably still domiciled in California and will be required to file and pay full CA income taxes.   See this,

https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf

Only you know the facts of your situation and whether you have truly changed your domicile to Texas.  If you were a full year resident of California for 2019, and you claim you move out in 2020 and move back in in 2021, that might make you an audit target.  But it always depends on the facts and circumstances.  It's possible to move to another state with every intention of changing your domicile, only to have things not work out and you move back.  You will have to be careful, though, if I am correct that you were domiciled in California pre-COVID. 

[Anonymous]

Ask your company why they think they have to register in TX.   there is no individual or corporate income tax. There could be other reasons though.  TX does have a sales tax and your physical presence there may require them to collect and pay that tax.  

[vsundeep11]

@Anonymous 

A foreign filing entity, as described in section 9.001 of the BOC, must file an application for registration, previously known as an application for certificate of authority, if it “transacts business” in Texas. Texas statutes do not specifically define “transacting business;” however, section 9.251 of the BOC lists 15 activities that do not constitute “transacting business.” Generally, a foreign entity is transacting business in Texas if it has an office or an employee in Texas or is otherwise pursuing one of its purposes in Texas. The secretary of state cannot give a legal opinion as to whether a particular foreign entity is “transacting business” in Texas. If you are unsure whether registration is required, you should consult with your legal counsel.

[vsundeep11]

@Opus 17 

For last 10 years I was domiciled in Texas, I  took this CA job in February this year and had only physical stayed and worked for my employer in CA for 6 weeks, rest all was from Home office in Texas. I was planning on moving to CA from Texas, but with the pandemic and work from home being extended till March 2021. I prefer to stay in TX thru March 2021.

Saving the taxes is less of a concern for me in the current scenario. Just want to stay with the family and avoid unnecessary burden of moving to a new place during pandemic. 

[TomD8]

OK, then your only state tax obligation for 2020 is to pay CA income tax on the income from the work you did in CA.

The address you should put on your tax returns is the address you want the tax authorities to use in case they need to contact you.