TomD8
Level 15

State tax filing

A W-2 employee who is CA non-resident and has no CA-source income has no income tax obligation to the State of California.  CA's rule is that W-2 income is sourced where the work is actually (physically) performed.  Thus a W-2 taxpayer in your situation would owe no income tax to CA on his or her earnings after establishing residence in Romania.

 

Unfortunately, due to the California Tax Court's 2019 Bindley decision, the source of an independent contractor's income is determined by where the benefits of the contractor's services are received

https://ota.ca.gov/wp-content/uploads/sites/54/2019/08/18032402_Bindley_Decision_OTA_053019.pdf

 

This web reference discusses the Bindley decision:

https://www.andersen.com/pressroom/california-decision-highlights-states-aggressive-stance-on-taxing...

 

I have no idea how California enforces this decision, but my (totally unofficial) guess is that CA will regard 1099-NEC income as taxable by California if the Payer's address on the 1099-NEC is in California - regardless of whether or not the recipient lives in or works in California.

 

 

 

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