If I live in Texas and work remotely for a company in California, do I need to pay taxes in California? Box 15 on my w2 says TX.

[DMarkM1]

For the time you physically worked in CA you will pay taxes on the income earned there.  Your company should be withholding CA taxes for that period.  Once you move back to TX you need to have your company stop CA withholding. 

When you file your taxes for 2021 you will pay non-resident taxes to CA for the period you were physically in CA working. For subsequent years you will not pay or have taxes withheld for CA as long as you do not physically work in CA.  

[halzlindz]

How will this affect my company with me working remotely from TX for a CA based company?

[DMarkM1]

Once you file the correct forms to have them stop withholding CA taxes from your pay they will stop withholding CA income taxes from your pay.  You are still an employee so they will still pay Unemployment tax and Employment Training Taxes based on the number of employees. Those items do not affect your pay.

[Kayval1]

What form is required to have them stop withholding CA taxes? I've been living in Texas since I started working for a California based company in July, and they have been taking CA taxes out from the beginning. We just filed, and I still owed federal taxes...

[GLEN60]

Used TurboTax State - still had to pay some CA tax despite all the expert opinion that is contradictory to the software calculations based on their laws. 

[DMarkM1]

The form to file with your employer is a DE-4.  Here is a link to the form.  The HR/Payroll representative for your company will be able to assist with the correct paperwork.  

[GLEN60]

Used TurboTax State 2020 - still had to pay some CA tax despite all the expert opinion that is contradictory to the software calculations based on the laws. 

[jpiz29]

Does this still apply to tax year 2021? My daughter lived in Texas, but she worked online for the state of Rhode Island. Box 15 shows Rhode Island on the W4, but she did not move until 2022. Do we need to file the state income tax?  

[FangxiaL]

Your daughter's income is considered Rhode Island-source income. She needs to file a Rhode Island nonresident return. 

@jpiz29

[TomD8]

But if your daughter was a resident of Texas all of 2021, and all of her work was performed remotely from a Texas location, it is Texas-source income and is not taxed by Rhode Island.  If that’s the case, she would only have to file in RI if RI taxes were incorrectly withheld from her pay.  On that return she would allocate zero income to RI so as to obtain a refund of those withholdings.

Rhode Island does not tax the remote earnings of non-residents.

[Ageez131]

For this case, the employee is a TX resident and remote works for a CA employer (never setting foot in CA). Would the employer need to pay state taxes to TX and CA or just one state for the employee?

[TomD8]

@Ageez131 

If the W2 employee never physically works in California, his income is not taxed by California.

Texas has no income tax.

[FixThisSF]

Following up here, in the situation where one is a CA nonresident with no California source income (working remotely from another state), does one complete the CA DE-4 as "exempt" (even though not exempt for Federal) - or just rely on completing using out of state address.   A technical reading of CA DE-4 seems to indicate that you can't claim "exempt" unless no federal tax liability in prior and current year).  Thanks

[TomD8]

-reply deleted-

[FixThisSF]

Hi Tom, Thanks for your reply, but I don't think that applies in this situation as that form is not for when "The payments are for wages to employees".  It's for contractors, not employees.