Live in PA but work remotely for a company in IL and CA

[michelle9999]

I lived in PA and work 100% remotely. First 6 months, I worked for a company in IL, then worked for a company in CA. W2 withhold PA state tax. Do I need to file IL and CA state taxes and pay state income taxes?

[MayaD]

If you only worked remotely then your income is considered PA income. You don't need to file IL and CA return. 

Answer No to the question whether you are making money in any other state.

[michelle9999]

@MayaD under what situation I will need to file non-resident state tax?

[MayaD]

Generally, you’ll need to file a nonresident state return if you made money from sources in a state you don’t live in.

The income sourcing is determined by the location where the employee services are actually performed, not the location of the employer. 

Why would I have to file a nonresident state return?

[James V]

I am currently in this situation as well. Just to confirm, If I live and work remotely in PA but my employer is in CA, and in my contract it says I am hired to work 100% remotely from PA, I do not need to file or have taxes withheld for CA state tax?

[TomD8]

@James V --

Correct, assuming you're a W-2 employee.  (CA's rules are a bit different for independent contractors.)

[RaifH]

Yes, that is correct. You are not required to file a nonresident California return for your wage income. The only reason you would file a California return is if you have other income sourced to that state, like from a rental property in California, or you ever physically worked in California in 2021.

You would also have to file a nonresident California return if your employer inadvertently withheld California state taxes on your W-2. If they did withhold California taxes, you would allocate $0 of your wages to California and the entire amount of California taxes withheld in Box 17 of your W-2 would be refunded to you. 

@James V

[TomD8]

@James V --

One other thing - if your CA employer does not withhold PA taxes for you, then you must make quarterly estimated tax payments to PA.  This reference gives the details on that:

https://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/PIT/Documents/rev-577.pdf

[James V]

Thanks for the information! Yes, I am a W-2 employee and they are withholding PA taxes for me. I started this week with the company and we have it set up they are NOT withholding CA taxes. I just wanted to make sure that is the correct way to go about it.