topic California taxes for Florida resident? in State tax filing

California taxes for Florida resident?

IggyL — Mon, 29 Mar 2021 00:33:50 GMT

I live in FL (no state taxes) but work for a company located in CA. All the work is done remotely. I've never been to CA, not even for a day. The company insisted on withholding CA taxes, because that's where "my work location is". When TurboTax asks "How much income you earned in CA", does it want income from CA source, which is all of my income, or income while I was present in CA, which is $0?
If I enter all of my income, then it seems to get taxed in CA, even though I don't live there. Is that correct?

Re: California taxes for Florida resident?

MaryK4 — Mon, 29 Mar 2021 00:53:17 GMT

Because you worked in Florida, your income is not California-source income so you can enter 0 for the California wages. Unfortunately, you are required to file the nonresident California tax return to get the withholding returned.

As a nonresident, you pay tax on your taxable income from California sources. Sourced income includes, but is not limited to services performed in California

Re: California taxes for Florida resident?

IggyL — Wed, 31 Mar 2021 16:53:52 GMT

Either I wasn't very clear, or I see a contradiction. The income WAS CA-sourced, since the company is in CA. I just physically wasn't there, doing all the work remotely on a computer. Could you please clarify whether I still enter $0 as for CA wages, or do I actually enter all of my wages there, since all of income was from that CA company? Thanks!

Edit 3/31/21: Apparently I wrongly thought that the source of income was where the work was provided. It turns out that the source is where the work was performed. So, in my case, the income is sourced in FL.

Re: California taxes for Florida resident?

npierson7 — Mon, 29 Mar 2021 01:11:49 GMT

You should put 0 income for California and file Non-resident tax return to refund your state income taxes paid. Location of your company don't make you liable for paying California state income taxes.

Re: California taxes for Florida resident?

IggyL — Mon, 29 Mar 2021 01:14:15 GMT

When I tried that approach, the Payroll Dept told me that "they are a CA company, so the withhold CA taxes, and where I chose to live is of no consequence".

Re: California taxes for Florida resident?

DavidD66 — Mon, 29 Mar 2021 02:13:54 GMT

Working for a company based in California doesn't make it California sourced income. None of your income is taxable by California. Since you are a Florida resident and do not work in California, your employer should not be withholding California state taxes. If you can't convince them to not withhold California tax, you can adjust your withholding to minimize the amount of tax withheld. You may also want to contact the California Taxpayer Assistance Center at 1-888-745-3886.

Re: California taxes for Florida resident?

IggyL — Mon, 29 Mar 2021 15:27:18 GMT

Thanks David. I found this example in TurboTax Help, however, which appears to contradict what you said earlier. Any thoughts on that?
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How much of my wages did I earn in California?

Since you're filing a nonresident return for California, you should only enter wages that you earned while working in California. Don't include any wages that were earned in your resident state.

Example: Nolan lived in Oregon all year. He worked at a job in Oregon for 6 months, and he worked at a job in California for 6 months. He received a W-2 for his job in Oregon that shows he earned $40,000 in wages. Also, he received a W-2 for his job in California that shows he earned $60,000 in wages. Nolan should only report the $60,000 from his California W-2 on his California nonresident return.

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Re: California taxes for Florida resident?

TomD8 — Mon, 29 Mar 2021 16:51:32 GMT

From CA FTB Publication 1031, page 6, Wages and Salaries:

"Wages and salaries have a source where the services are performed. Neither the location of the employer, where the payment is issued, nor your location when you receive payment affect the source of this income."

https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf

The advice you've been given by @DavidD66 , @npierson7 , and @MaryK4 is correct. And your employer should NOT be withholding CA taxes from your pay.

Re: California taxes for Florida resident?

IggyL — Mon, 29 Mar 2021 17:22:33 GMT

So, following that logic - how do I determine that "source"? Here's a simplified example: let's say, I live in FL but work for a CA accounting company that does tax returns. Let's say, the company only has offices in CA. I log into my computer, access financial documents stored on company's server in CA, complete all the work on my own computer, and then upload completed tax returns back to company's server. In this case, what is "a source where the services are performed"?

Re: California taxes for Florida resident?

TomD8 — Mon, 29 Mar 2021 17:54:04 GMT

@IggyL

The source in your example is Florida. The income is sourced where you are physically located when you perform the work.

Think of it this way: mega-corporation Procter & Gamble is located in Cincinnati. Do you think every P&G employee that accesses a company server in Cincinnati has to pay income tax to Ohio?

Re: California taxes for Florida resident?

LenaH — Mon, 29 Mar 2021 17:57:53 GMT

The source is determined by where you perform the work. In your example, even if you logged into a network located in California, you are still performing your duties as an employee in the state of Florida.

@IggyL

Re: California taxes for Florida resident?

IggyL — Mon, 29 Mar 2021 18:04:01 GMT

@TomD8

I agree with you. In case of P&G, an employee is most likely working at a local office, and getting taxed there. That was the case for me when I worked for a national employer.
I am still a bit concerned because an example that TurboTax provides - which I mentioned above - directly contradicts what you all nice folks are saying.

Re: California taxes for Florida resident?

IggyL — Mon, 29 Mar 2021 18:05:51 GMT

Thank you @LenaH. As I just said in my other reply, I am concerned that the example TurboTax provides in their help contradicts what all of you folks are saying. :(

Re: California taxes for Florida resident?

TomD8 — Mon, 29 Mar 2021 18:13:26 GMT

@IggyL -- The example you previously cited does not contradict what you've been told. In that example, the taxpayer worked 6 months IN Oregon, and 6 months IN California. In your case all the work was performed IN Florida.

Re: California taxes for Florida resident?

IggyL — Mon, 29 Mar 2021 18:19:25 GMT

@TomD8 That example starts with "Nolan lived in Oregon all year". Why do you say that he worked IN California?

Re: California taxes for Florida resident?

TomD8 — Mon, 29 Mar 2021 19:50:16 GMT

@IggyL —

Because that’s what the example says.

Re: California taxes for Florida resident?

IggyL — Mon, 29 Mar 2021 20:01:46 GMT

@TomD8

So, TurboTax example states that even though Nolan lived the whole year in OR, he needs to pay CA taxes on $60k that he earned while working for a CA company.
You state that because I lived the whole year in FL, I don't need to pay any taxes on income I earned while working for a CA company.

Both statements cannot be correct at the same time. 🙂