California Income Tax for US Citizens Residing in a Foreign Country and Telecommuting for a California Company

Forum|Forum|7 years ago
June 4, 2019
4 replies
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I am a US citizen and had lived in California and paid California State income tax for many years. I permanently moved to France in December 2016, and lived in France the entire 2017 (365 days). I recently obtained a French residence permit.

While I lived in California, I worked as a software developer for a California-based company on a telecommuting basis for a decade. While residing in France in 2017, I continued working remotely for this company all year.

My entire income is generated from this company/employer. California State income tax has been withheld from my paychecks for 2017, just as in previous years. All I have left in California is one bank account where my paychecks are direct-deposited and one PO Box where I receive my mail (which is then sent to my French address periodically by a friend). I have no other ties to California.

I am now doing my 2017 taxes. My question: Am I considered a California resident, and do I have to pay taxes to the State of California? I am guessing since the source of my income is a California company, then I'd have to still pay both Federal and California State taxes, even though I reside in another country (I am not paying any taxes to the French government for 2017). I'd appreciate any answer/thoughts on this.

TurboTax Home & Biz Windows

Best answer by viktoriyab11

Please follow this link to determine your residency status: Residents, nonresidents, and part-year residents https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents-Part-Year-Residents.shtml#residency_status

California defines California source income as "income for services performed IN CALIFORNIA." See the Compensation section of this reference: https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents-Part-Year-Residents.shtml#compensation
In fact, California specifically states "Wages and salaries have a source where the services are performed."
Therefore a CA non-resident who never physically worked in California does not have California-source income and is not subject to CA income tax.

Hope its help.

viktoriyab11Answer

Level 7

Hope its help.

TelecommuterAuthor

Level 2

Thank you TurboTaxViktoriya. I read your links and the FTB site couldn't be any clearer about the "source of income". But this also means that TurboTax doesn't know what it is doing in a situation such as mine. In the "State Taxes > Residency Status" section, I entered that I was in FC (foreign country) for the entire 2017. Yet, turbotax filed a 540NR, and of $5600 State taxes withheld, turbotax is saying I am entitled to only a $740 refund. Or perhaps, is it possible that I didn't enter the correct information?