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Level 1

If I am a self-employed consultant in OK to previous employer in CA, do i list all self-employment income on CA tax return as "from a CA source while a non-resident"?

"self-employment income from California sources while non-resident of California." 

I moved from California to OK in August 2017. I worked as a self-employed consultant in OK providing services to my previous employer in CA. I received a 1099-Misc from them with my income listed in box 7, nonemployee compensation. Do i need to list all my self-employment income on my CA tax return as "from a CA source", or since my consulting business and residence is in OK, do i answer this question with a zero? Thank you for your help. 

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Level 3

If I am a self-employed consultant in OK to previous employer in CA, do i list all self-employment income on CA tax return as "from a CA source while a non-resident"?

Since your consulting business is in OK, you will not list this income on your CA return, it would only be listed on your OK return. Income as a non-resident from CA sources would be income received while traveling to CA but living outside of the state.  So if you traveled to your employer's locations while living in OK, that specific income would be taxed by CA.  If you worked 100% from OK after you moved then it would only be included on your OK return. 

5 Replies
Level 3

If I am a self-employed consultant in OK to previous employer in CA, do i list all self-employment income on CA tax return as "from a CA source while a non-resident"?

Since your consulting business is in OK, you will not list this income on your CA return, it would only be listed on your OK return. Income as a non-resident from CA sources would be income received while traveling to CA but living outside of the state.  So if you traveled to your employer's locations while living in OK, that specific income would be taxed by CA.  If you worked 100% from OK after you moved then it would only be included on your OK return. 

Level 4

If I am a self-employed consultant in OK to previous employer in CA, do i list all self-employment income on CA tax return as "from a CA source while a non-resident"?

OK, I need to say something to everyone...  DO NOT put trust in ANY advice you see on this Intuit/Turbo Tax discussion board regarding your specific tax situation.   The last thing you want to do is to use a statement/comment being made by a non-tax expert to determine what you should do.  Especially if you are facing a difficult tax situation, seek out an expert to guide you.  My wife received a letter from the California FTB that indicated, even though she was a resident of Michigan for the full year, she owed California tax on her income since most of her clients are located in CA.  Specifically, my wife operates a home-based medical transcription business in Michigan.  She never steps foot in California.  However, per CA tax law, since she provides a service to CA-based businesses, it is deemed CA sourced income.  Because of that, my wife has to file a CA (non-resident) tax return as well as pay income tax to CA.  Does the situation suck?  Yes, absolutely it does!  But when the California FTB sent my wife a letter informing that she owed taxes, we initially did not believe it could be valid.  So we challenged it.  After talking to two tax experts who researched the situation heavily, ultimately learned that my wife did indeed owe CA tax on the income that she makes from individuals/businesses who are in CA.  The only good news in this scenario is that my wife does not need to pay Michigan tax on that same income - but it sucks nonetheless to have to file two state income tax submissions and pay income tax to two different states (with CA tax rates being much higher than MI, of course) even though all my wife's work is being done in Michigan.

Level 20

If I am a self-employed consultant in OK to previous employer in CA, do i list all self-employment income on CA tax return as "from a CA source while a non-resident"?

You have tacked onto a thread that is more than one year old ( the 6/4 date is not correct since the threads were migrated to the new forum on that date ... so all the prior posts have the exact same incorrect date)  and since the original post CA has changed the tax laws on the subject  AND  seem to be going after prior year returns making the change retroactive ... the TT program could not possibly anticipate such a change but will adjust the program accordingly going forward.    

Level 20

If I am a self-employed consultant in OK to previous employer in CA, do i list all self-employment income on CA tax return as "from a CA source while a non-resident"?

In May 2019, the California Office of Tax Appeals ruled very recently that income from California-based clients is taxable as California source income.

 

For some discussion:

https://www.coblentzlaw.com/california-office-of-tax-appeals-gives-precedential-authority-to-bindley...

 

https://money.stackexchange.com/questions/95243/is-self-employed-work-performed-out-of-state-for-a-c...

Level 9

If I am a self-employed consultant in OK to previous employer in CA, do i list all self-employment income on CA tax return as "from a CA source while a non-resident"?

The court case did not make the change retroactive. The court case affirmed the law that has been in effect since at least 2014.

 

Here is a 2014 article about how CA has had market based sourcing since then.

http://www.marcumllp.com/insights-news/state-tax-update-the-shift-from-cost-of-performance-to-market...