I live in Washington State and Worked from Washington State for a California Business. Do I pay CA taxes?

[isobelgrey]

I am not sure about that since I am filing with TurboTax as CA PY resident but it  still considers WA income as CA income no matter what I do. I guess since my W2 says it was paid to CA, so it is california's. I have contacted my accounting department about that issue and if they can fix it from their side..

[DavidD66]

If you were a resident of California when you earned the income from Washington, it's taxable by California.  If you were not a California resident at the time, then it is not taxable by CA.

[ian21352]

-Between Jan - July 2020, i was working for a WA company.
-I just started a new job with a company based in CA in AUGUST 2020   
-I still live in WA and plan to stay here in WA through end of DEC 2020 and possibly moving to CA in Jan 2021

My CA employer is garnering CA taxes on my paycheck.   Will I have to file a CA return in April 2021?   And what are the chances that I will get those $ back considering I don't live in CA and make use of any services there.

Thanks 

[TomD8]

@ian21352 

Any work you actually (physically) perform inside CA is taxable by CA, regardless of your state of residence.

If you're a W-2 employee working 100% remotely from a WA location for a CA employer, and you remain a resident of WA for all of 2020, then your income from that remote work is not taxable by CA.  However, at year's end you'd have to file a non-resident CA return, showing zero CA income, in order to get a refund of any incorrectly withheld CA taxes. 

If you're an independent contractor (you receive a 1099-MISC instead of a W-2) working remotely for a CA employer, then your income is taxable by CA.

[ian21352]

This is odd.  I am following all the steps in TTax, and declare that I was not, have never been a CA resident for all of 2020.   TTax for CA still says that I owe taxes.  I already paid some bc my CA based company and am hoping to get the $ back. 

in the help section, it shows the case below and I followed the instructions -- but TTax still says that I owe taxes on the wages based on the few months that were paid through my CA employer

--- Help Section ---

How much of my wages did I earn in California?

Since you’re filing a nonresident return for California, you should only enter wages that you earned while working in California. Don’t include any wages that were earned in your resident state.

Example: Nolan lived in Oregon all year. He worked at a job in Oregon for 6 months, and he worked at a job in California for 6 months. He received a W-2 for his job in Oregon that shows he earned $40,000 in wages. Also, he received a W-2 for his job in California that shows he earned $60,000 in wages. Nolan should only report the $60,000 from his California W-2 on his California nonresident return.

[DaveF1006]

It depends how you reported your California income.  When you prepare your California return, You will allocate the amount of California income earned in California. I have included a screenshot of that screen where you report the California allocation. 

You do have a certain amount of tax liability to pay inn California even though you are strictly a non-resident. if you did not have enough withholding tax taken from your California W2, it is possible you may owe California taxes. In my scenario I prepared for this answer, on $60K worth of California income, the tax liability was $1351 (for a single filer).  If there were no withholding done, this person would have owed $1350.  Your may be more or less depending on your filing status.  Here is the screen in the California section of your tax return where you allocate your income. Be sure to check your entries to make sure no other income is allocated to California.

[ian21352]

Hi @DaveF1006 
Thanks for your response.  I found this FAQ from FTP.ca It applies during COVID 19  period. 

Scenario 2: You work for a California employer and receive a W-2 from them. You relocate temporarily to California. Will you need to file a California return and pay California income tax?

Answer: You need to file a California personal income tax return if you performed services in California for wages. Where you performed services determines how you file your taxes (not the location of your employer).

It seems that TTax 2020 has outdated information on the help. 

[clouseau]

does turbotax adjust for this scenario if my CA-based employer does incorrectly take CA state taxes out of my paycheck and show them in my W-2? 

[DaveF1006]

Yes, Turbo Tax will determine that for you. Chances are as a California non-resident, you will get most if not all of it back.

[clouseau]

Great, thank you!

And I assume if I do eventually relocate to California, TurboTax can easily make the adjustment just for the period of time I am living in Washington State - even if it just ends up being for a few weeks or months?

[Kfurtado1]

I have a similar question. My husband is relocating to Washington in the Army and my California job has offered to let me work remote. They do not have a tax ID in Washington. Will this affect my tax returns? Would I stay a resident in CA and a domicile in WA? If I update the address on my ID with I have to update my W4 with my company?

[TeresaM]

Because your husband is in the military, he can keep his state residency in California, or switch it to Washington.  You will qualify for the same as a military spouse. So either of you, or both, can claim a resident state in California or Washington. You can keep your California license if you decide to remain a California resident.

In addition, your income is reported in the state you are physically when you did the work, not where the company is located. So you would report it in Washington, except there is no individual Washington income tax, so you will not need to do so.  You company will not need to pull state withholding for those wages earned in Washington. 

Click here for more IRS information about taxes in the military. There are exceptions for those in service.