Remote work

Forum|Forum|5 years ago
August 7, 2020
2 replies
14 views

I live in North Carolina and have a S Corp there. I work remotely and see clients in California. Do I have to pay taxes to California?

Not A Product Question

Carl

Level 11

Generally if you work in California, whether you’re a resident or not, you have to pay income taxes on the wages you earn for those services. That’s due to the “source rule”: California taxes all income with a source in California regardless of the taxpayer’s residency. And for purposes of taxing employees, the source of income from services is the location where the services are performed. This is true even if you are a nonresident, even if the contract with the employer is made out-of-state, and even if the wages are paid outside of California.

Rick19744

Level 13

There are a number of factors that impact whether a taxpayer (or business) needs to file in a particular state regardless of whether they are domiciled or "incorporated" in a particular state. This has to do with what is known as nexus (contact) creating activities.

Additionally, states have different types of tax which in general are a state income tax or a franchise tax which is essentially a privilege tax to do business in that state.

I have attached a link to get you started in this area, but it may be in your best interest to discuss this with a tax professional.

https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.html

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.