From what I have read neither AZ or CA are a convenience state (Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York, and Pennsylvania) Does this matter? Will I need to continue to fill out two state tax forms each year? (Refund from CA/Bill from AZ)
No, if you are not working physically or living in CA, you do not need to file a CA return, just your AZ home state return.
If your employer withheld taxes for CA from your wages, then yes, you would need to file the CA return to get your refund. You may also want to ask your employer to change the state they are withholding for.
Thank you for the help! Would the California Source Rule tax apply for remote work?
CA does not tax non-resident remote workers who are W2 employees. However, were you ever to physically perform work inside CA, the income from that would CA-sourced and would be taxable by CA.
Income is sourced according to where the employee actually performs the work.
So for line 15 on the W-2, it states AZ, I'm assuming state taxes were withheld from AZ? which would mean I would not have to file one for California? Sorry just confused by this.
If you never lived in or physically worked in California in 2022, and if no California taxes were withheld on your W-2, and if you have no other California-source income (for example, rental income from a property in California, then you don't have to file a California tax return.
Correct. You live and work in Arizona and owe taxes to Arizona. You do not have to file a California tax return unless you physically do work in California.