California-sourced income is based specifically on the days you physically worked in the state. Thus, you should use the Day-Ratio Method to avoid a potential audit from the California Franchise ...
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California-sourced income is based specifically on the days you physically worked in the state. Thus, you should use the Day-Ratio Method to avoid a potential audit from the California Franchise Tax Board (FTB), which is notoriously strict about residency and sourcing. The standard formula that California taxes nonresidents on income earned while physically present in the state is: CA Sourced Income ($) = Total Annual Wages ($) X {Workdays in California / Total Workdays Everywhere) Using your scenario... Workdays in CA: 18 Total Workdays Everywhere: approximately 240–260 days (excluding weekends, holidays, and vacation). if you worked 250 days total in 2025, your percentage would be (18 / 250) = 7.2% Thus, if your TAW is $50,000 X 7.2% = $3,600 CA Sourced Income Open or continue your return. Within your California state return section, Mark yourself as a Nonresident. When the program asks you how you want to allocate your income, Choose "Work Day Ratio" or "Manual Allocation." Enter the specific dollar amount calculated using the formula above. Since Texas has no state income tax, you don't need to worry about filing a TX return. You will file Form 540NR (Nonresident or Part-Year Resident) for California. Note: If you had Intel Stock Options/RSUs vest while you were in Texas, but they were granted while you were in California, CA may claim a portion of that income as well. Make sure to keep track of your final move date (since you moved for a job. You may be entitled to certain adjustments depending on your specific contract (i.e., whether you were reimbursed for your moving expenses or not).