I live in Washington State and Worked from Washington State for a California Business. Do I pay CA taxes?

[ChelsiE2 · Accepted solution]

No.  If you are an employee of a California based company but telecommute from another state, you will only be subject to taxation by the state you are actually a resident of.  

In your case Washington State has no Income Tax so you should not have to file a state return at all.

[i-am]

Does the same apply if I am an independent contractor of a CA based company (as opposed to an employee) who resides in WA state and works remotely?

[ChelsiE2]

@i-am Do you ever travel to California?

[i-am]

Not for the contract work

[ChelsiE2]

@i-am  Here's what the FTB says: "A nonresident’s income from California sources includes income from a business, trade, or profession carried on in California. If the nonresident’s business, trade, or profession is carried on both within and outside California and the part outside California is separate and distinct from the part within California, only income from the part conducted within California is California source income."

Therefore if these activities were not "carried on" in California (i.e. you were not physically present in CA for any reason related to this work), then you will not be subject to taxation by the FTB.

[i-am]

Thank you!

[NotVeryTaxGal]

What is the difference if I would to commute to CA or not?

So I work for a California employer and live in Washington state. However, I commute to my California office 3 days a week. Do I have to pay taxes for all of my income earned through a California employer? Or do I only pay California taxes for the income corresponding to the days I spent in California? 

Also, Am I considered a California Resident because 3 work days in CA and 2 work days in WA? Even though I stay at hotels in CA, and my home is in WA.

[Song_Michele]

Hi,

I have the exact same question.  Will someone answer this one?

Thanks.

[BillM223]

The information given by ChelsiE2 above is correct. However, it does not address the question of what if you do some work in California and some in another state.

Let's take the simple case: you work for an employer as an employee or for a company as a contractor. For any day that you are physically working in California, then the income earned on this day is taxable in California.

For the employer who is working all year on a salary, this is relatively easier to figure - take the number of days spent working physically in California, divide by the total number of working days, and then multiply this ratio by the annual salary to get the amount of taxable income allocated to California.

Note that this does not affect your resident status for California tax purposes. If your domicile is in another state, then you file as a non-resident in California, even if you have California-sourced income. Please see the comments on part-year resident and non-resident at the Franchise Tax Board's website.

[TomD8]

@Song_Michele -- Due to a 2019 court decision, if you are a non-resident sole proprietor (as opposed to an employee) and you provide services to a client located in California, that income is subject to California taxation even if you never set foot in California.

[Song_Michele]

That is good to know.  Thank you.  My scenario is a bit different.  The employee lives in WA state and works part time in California and pt in WA.  I have a couple of questions.  Is this employees wages subject to CA personal income tax?  Also, how can I process multistate payroll using QuickBooks online?  I do not think it is possible to process one payperiod with two work locations.  Thanks.  

[TomD8]

@Song_Michele -- The portion of the employee's wages earned by working in California is taxable by California.  The portion earned by working in Washington is not taxable by California.  Washington State, of course, has no income tax.

I would pose your QuickBooks question on the QuickBooks site.  This is a TurboTax forum.

[isobelgrey]

But what if I have relocated to Washington State from California but my new WA employer paid 2019 taxes to California by accident. I still cannot figure out how to return this money using TurboTax, which thinks I still owe California as a part-time resident... Thanks a lot!

[JamesG1]

Filing a CA PY Resident or Nonresident tax return would allow you to report the CA taxes withheld and, perhaps, receive a refund of some or all CA withholding that was paid in.

This link explains the CA filing requirements for each tax return.