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Living and working in Nevada(WFH) but company is in California?

I recently moved from California to Nevada in June. I literally spent 160 days in California in 2022, so not even half the year. But now I need to do my taxes and California is stating I OWE them money, eventhough my employer has been taking taxes out of my paycheck the full year so I should get money back since nevada has 0% state tax. I went to Jackson Hewitt and they are stumped. I can't file a Nevada state return since there are no state taxes. So every year do I have to file a california return as if I lived there eventhough I didn't? I also am not technically working in California since I work from home and have not set foot in California since. Please help! 

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3 Replies

Living and working in Nevada(WFH) but company is in California?

Yes. A nonresident pays tax on their taxable income from California sources.

 

Sourced income includes, but is not limited to:

  • Services performed in California.
  • Rent from real property located in California.
  • The sale or transfer of real California property.
  • Income from a California business, trade, or profession.
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TomD8
Level 15

Living and working in Nevada(WFH) but company is in California?

The answer to your question depends on whether or not you are a W-2 employee (as opposed to an independent contractor).  CA's rule is that W2 income (wages and salaries) is "sourced" where the work is actually (physically) performed.  Therefore if you carried on your work solely from within NV after your move, then your income from that work would not be taxable by CA.  See Income Taxable by California on page 6 of this CA tax publication:

https://www.ftb.ca.gov/forms/2021/2021-1031-publication.pdf

 

Additionally, page 16 of the California Employers Guide states that CA taxes are to be withheld from non-residents only on wages earned in California

https://edd.ca.gov/siteassets/files/pdf_pub_ctr/de44.pdf

 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Living and working in Nevada(WFH) but company is in California?

This year, you file as a California part-year resident.  You owe California income tax on all your world-wide income that was paid to you while you lived in California.  Indicate in Turbotax that you lived in California and give your move-out date.  Turbotax may be able to allocate your income automatically (based on number of work days in the year and the number of days in California) but you may have to allocate other income manually.  (For example, investment interest and dividends will be taxable to California only if they were earned or paid during the time you lived in California.).  You are probably over-withheld so you can expect a refund.  

 

You do not owe California income tax on wages paid to you when you are both living and working out of state.  California is not one of the states that adopts a "convenience of the employer" rule on remote employees.  However, you will owe non-resident California taxes for any part of your wages that are earned while you are living or working inside California, such as if you have to attend mandatory meetings or training on site a few days a year. 

 

You should probably have your employer stop your California tax withholding.

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