Moving from a state without a personal income tax to a state with a personal income tax

[wastudent]

I have kind of an odd question that has been difficult to find an answer on my own. I am potentially moving from the state of Washington (no personal income tax) to California (has a personal income tax). I am a 4th year graduate student at a university in the state of Washington and have established residency for in-state tuition purposes. Lastly, for my employment I am teaching courses for the University remotely from California.

As the state of Washington does not have a personal income tax (i.e., no potential for me to get double taxed from both states), my question is if the university sends me a W2 at the end of the year referencing a Washington address for myself, can I, on my own, file my taxes as a resident of California, effectively paying the CA income tax? Or do I need to notify my employer to fix the state on my W2, and then file my taxes with the corrected W2?

Thank you!

[Mike9241]

you say you are a resident of CA, therefore your w-2 should reflect CA wages and withholding

Generally if you work in California, whether you’re a resident or not, you have to pay income taxes on the wages you earn for those services. That’s due to the “source rule”: California taxes all taxable income with a source in California regardless of the taxpayer’s residency. In other words, nonresidents pay California income taxes on taxable California-source income. With respect to employees, the source of income from services compensated by W-2 wages is the location where the services are performed, not the location of the employer.

since you are working in CA., the university should be withholding CA taxes. but it doesn't hurt to check.

[rjs · Accepted solution]

The address on your W-2 is just a mailing address. It has nothing to do with where you worked.

If your employer is withholding California tax, your W-2 will have CA in box 15, your CA wages in box 16, and the amount of CA tax that was withheld in box 17. That's all you need on your W-2.

If they are not withholding CA tax, you should ask them to start doing so right away. If you have no tax withheld during the year you will have a big tax bill when you file your CA tax return, plus a penalty for not having paid tax during the year. If they will not withhold CA tax, you should make estimated tax payments to CA. Then you won't have, and don't need, anything about CA on your W-2.

If your W-2 does not show any CA income, the state of California will not object to any tax that you want to pay to them. Note that if you become a CA resident and file a CA resident tax return, you must pay CA tax on all of your income, no matter where the income is from, not just income from working in CA.

[TomD8]

To put it all another way, any income you earn by physically working from a location within California is fully subject to California income tax.  This is true even if you are not a resident of California, and it is true regardless of your employer's location.