State Tax filing for remote workers (CA & NC)

Forum|Forum|4 years ago
April 16, 2022
1 reply
12 views

I live in CA and I work remotely for a Company in North Carolina the whole year of 2021 without traveling to NC. I received 2 W2s. One with Fed and CA taxes and another one just for NC Tax. I do my own taxes ever since using TurboTax. Do I need to file a non-resident income tax for NC? Any help is much appreciated. Thanks, Luis.

Rick19744

Level 13

While the facts are limited, it appears that you are subject to NC tax since you derived income from a business, trade, profession, or occupation carried on in North Carolina.

This area / issue has taken the spotlight as a result of the pandemic.

So yes, you will need to file a NC nonresident tax return for the NC wages. Prepare this return first in TT.

Then prepare your CA return in TT. Since CA is your state of domicile, they will tax all of your income. However, you will then get a credit for taxes paid to NC on your CA tax return.

*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.

TomD8

Alumni - Champ

@lzuniega --

"...income from a business, trade, profession, or occupation carried on in North Carolina..."

The key word is "in".

NC does not tax non-resident remote workers. Remote work carried on from a California location is carried on in California, not in NC.

If you never physically worked in NC, your work income is not taxable by NC.

However, since NC taxes were incorrectly withheld from your pay, you must file a non-resident NC return, allocating zero income to NC, in order to obtain a refund of those taxes.

Wages and salaries are "sourced" where the work is actually performed, not where the employer is located. If your work situation is still the same, you should ask your employer to cease withholding NC taxes from your pay.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.