Domicile state is TX, but work remotely in CA for TX company. How would this affect tax filing rules?

[rsyed]

I reside in TX and work for a company in TX but occasionally work remotely for the same company while visiting family (around 15 days in the year) in CA. Are there any CA state income tax or additional tax withholding impacts in this scenario, or would I continue to file my taxes for TX only (i.e. no state income tax impact) since I'm not physically working at any company office in CA and working for less than 183 days from CA?

[DoninGA]

Since you do not have any California sourced income, do not work on live in California, you do not file a California nonresident state income tax return.

[TomD8]

Strictly speaking, work you perform from a location in California is California-source income, and the income from that work is subject to California income tax.

California law is that wage and salary income is "sourced" where the services are performed.  See Wages and Salaries on page 6 of this California tax publication:

https://www.ftb.ca.gov/forms/2022/2022-1031-publication.pdf

You would have to file a non-resident CA return if your income exceeded CA's filing requirements for non-residents.  Scroll down to Filing Requirements in this CA tax publication to see the (2022) threshold amounts:

https://www.ftb.ca.gov/file/personal/residency-status/part-year-and-nonresident.html#Do-I-need-to-fi...

[Hal_Al]

Q. I reside in TX and work for a company in TX but occasionally work remotely for the same company while visiting family (around 15 days in the year) in CA.  Do I have to pay CA state income  tax on that 15 days of work?

A. Yes, but "nobody" does. See http://money.cnn.com/2013/06/28/pf/taxes/business-traveler-tax-threat/  If you live in a state without an income tax (e.g. FL or TX), it’s more likely you should file in the work states. You can't use the "it all comes out even" rationale for not filing.

[DoninGA]

Opening a laptop and maybe working for a few hours in each day of the 15 days in CA would not even come close the CA standard deduction for any filing status so there is no reason to file a CA nonresident return.

[Opus 17]

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@DoninGA wrote:

Opening a laptop and maybe working for a few hours in each day of the 15 days in CA would not even come close the CA standard deduction for any filing status so there is no reason to file a CA nonresident return.

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I'm not sure that is correct for California, see this web page.

https://www.ftb.ca.gov/file/personal/residency-status/part-year-and-nonresident.html#Do-I-need-to-fi...

[Opus 17]

In general, income earned while visiting California and working during the visit is considered California-sourced income and is subject to California income tax.  You would file a California non-resident income tax return form 540-NR.  Technically, assuming there are about 260 working days in a year and you work 15 days while visiting California, then 5.77% of your work income would be considered California-sourced and subject to California tax.  I don't have access to form 540-NR, so I can't determine if there is some minimum below which you won't owe tax.

Practically speaking, it would be very hard to California to track you down as long as your company doesn't list California on your W-2, and @Hal_Al is probably right that (mostly) no one actually complies.  On the other hand, the statute of limitations doesn't start until you file, so if you never file, California could (in theory) come after you for the taxes at any future date without limits.  

[rsyed]

@Opus 17Thanks for clarifying. One question regarding the mimimum amount to determine if 540NR is required. From the instructions: https://www.ftb.ca.gov/forms/2022/2022-540nr-booklet.html#Do-I-Have-to-File-?  my understanding is if CA-sourced income earned only while working in CA (not total annual gross income for the year) is below the California Gross Income limits in the chart, no filing is required. Is that correct?

[Opus 17]

@rsyed 

I see the following:

"If your income is more than the amount shown in any of the tables below, you need to file a tax return."

So if your worldwide gross is more than Table 1 OR your California gross is more than Table 2, you must file.

At least, that's how I read it.  As mentioned before, if the wage amount is low enough, there might be an exemption amount.  And even if there is no exemption amount, California has no practical way to detect that you are working from your family's house instead of on a non-working vacation.  You may want to speak with a California tax professional for an answer that takes account of all your specific confidential income and other information.