california filing

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Does California require a state tax return if I earned money in California but lived in New York and paid NY taxes?

LenaHAnswer

Alumni - Expert

I physically performed all my work in New York so I guess I'm good to go without filing a CA return. However, I'm a little hesitant about not filing because of the way NY wants to see everything and get their money regardless of how it's earned. Is there any reason not to file a CA non-resident return (other than it's unnecessary work)? If I do file a CA return, will the TurboTax software ask the proper questions such that it knows I was not in CA and therefore determine I owe no tax?

Since there was no withholding in CA, will my employer even send my W2 results to the state of CA?

Sorry to belabor this point but I just want to avoid any issues with any state tax departments.

Per the State of California, as a nonresident, you only pay tax on your taxable income from California sources. Sourced income includes services performed in California. In addition, 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. Since you were located in New York, and performed services in New York, are you are not liable to file a nonresident California return.

If you file a nonresident California return, you can put a source income of 0 to the state of California. This will cause no tax liability and since you withheld no California income tax, there will be no refund or balance due. Since the return will be zero, you might have problems e-filing a blank return and you may encounter problems finishing your tax return. It is best to review the information above, as well as the link provided below, and not file a nonresident return as it is not necessary in your situation.

For additional information, please see 2020 Publication 1031.

@jsspbusiness

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BillM223

Level 15

Were you physically working in California? Then Yes, you must file a CA return.

Or, were you self-employed and a substantial amount of your income came from CA sources, even if you never went there? Then, also Yes, you must file a CA return, because of a CA court ruling that calls such income to be CA sourced income even if you were never there.

If you were a resident of New York, then do your nonresident CA return first, then enter your New York data. New York should see the CA tax that you owe and give you a credit for this against any NY taxes. Most states takes great pains to avoid double taxation, because the US Supreme Court told them to.

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jsspbusinessAuthor

Level 4

The company I was working for was in California; I was a summer intern. I was a New York resident, working remotely from New York, paying New York income tax. I paid no California income tax on my earnings.

I know if it were the other way around, i.e. permanent resident in NY but living and working in California, I would still have to pay NY taxes (which is what happened the prior year) and CA taxes.

It sounds like from the second paragraph of your answer, that CA still requires me to file, but what happens since I paid no CA income tax?

DaveF1006

Alumni - Intuit

The real caveat here is did you physically perform your work in NY or California? If you performed all your work in NY, then you will not need to file a California non-resident return. If you physically performed some of your work in NY and some in California, then you will need to file a CA return for the work that you PHYSICALLY performed in California including flying there for meetings or other work-related functions.

Also, if you received a 1099 in lieu of a W2, then all that money is taxable to California because you would be considered a self-employed contractor. if this is the case, then follow Bill's suggestion on filing your California non-resident return first and then your NYS resident return.

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