I live in California but work remotely for a company based in Pennsylvania. My question is about withholding taxes for these two states:
Currently, my employer withholds state taxes for both PA and CA. Since PA has a lower tax rate, it makes sense to withhold the full amount for PA. However, for CA, much of the withheld amount is based on double-counted income and thus ends up as refunds in my tax returns. This feels like wasted money to me since I could have accrued interest on them throughout the year.
So my question is, should I ask my employer to withhold a lower rate for CA? If so, how do I calculate what they lower rate should be? (Do I just estimate it based on the total CA tax, or is there a more accurate way?)
