California form 592-B

[Taxedguy2022]

I'm an Ohio resident. I'm a financial advisor and have a new 2021 California client. My company sent me a 592-B.  I have my Federal and Oh State taxes completed and am wondering what I do with this 592-B? Do I fill out a paper 540nr and send it to California?  I'm just confused on the whole process. The amount of tax withheld was under $100.

[Hal_Al]

You say "My company sent me a 592-B".  Is "my company" is your employer that you are a regular W-2 employee of? Or are you self employed and "my company" is the CA client? 

If the latter, you are subject to CA tax simply by having a CA based client. You need to file a CA non resident return.  On your OH return, you claim a credit for the net tax you end up paying to CA.  

If the former, that's  weird. You may need to ask your employer "what's going on?"

[Taxedguy2022]

I'm an Ohio employee for a local company. I'm both a w2 and 1099 employee. The income in question came from a CA based client and the income from the client would have been reported on the 1099.

Does your answer change based on this information?

Thank you!

[Hal_Al]

Q. I'm an Ohio employee for a local company. I'm both a w2 and 1099 employee. The income in question came from a CA based client and the income from the client would have been reported on the 1099. Does your answer change based on this information?

A. No. That just confirms that you are subject to CA tax simply by having a CA based client. You need to file a CA non resident return.  On your OH return, you claim a credit for the net tax you end up paying to CA. 

Be aware of special OH idiosyncrasy: Your self employment income qualifies for the Ohio BID (Business Income Deduction).  So, there is no double state taxation of that income. You will not get a credit for the tax paid to CA.  Claiming the BID is optional. So, you MAY want to do the math to see which is better, the BID or the credit for the CA tax  (it's almost always the BID).  The good news is: it shouldn't be necessary to revise the already completed OH return. 

[Tennisfam]

This is great information. I have a related scenario. I am a self-employed athlete and also live in Ohio. I received a 592-B from California from a week spent in the state competing. I also have a 1099 from California for work that was paid to me as an endorsement deal which is part of my general income for the entire year and does not relate specifically to California, but everywhere that I competed (3 countries outside the US, and 12 states). What income do I include on the state return? On another note...I have a huge loss in this state because California is so expensive: travel expenses, food, equipment maintenance, coaching, etc all totaled a ridiculous amount. It is my biggest loss of the year, but if I use a basic income allocation method (money received from CA over my net income), California would be entitled to 1% of my net income from business. Thanks! This is very complicated. I am using the basic income allocation method described in all other states.