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posted Oct 19, 2021 11:16:57 AM

Remote Work CA/WA

I switched jobs and the new company is headquartered in California. I am working remote from the state of Washington (no state income tax).  I do not need to be in CA to perform my work. Would I qualify for refunds of the CA taxes I am paying?  How do I file for one?

0 2 1895
2 Replies
Level 15
Oct 19, 2021 2:02:46 PM

If you are a resident of Washington and your remote work is entirely done from a Washington location, your W2 income from that work is not subject to CA taxation.  If that's your situation no CA taxes should be withheld from your pay.

 

CA taxes non-residents only on CA-source income.  W-2 earnings are "sourced" where the work is actually performed.  In other words, CA taxes non-residents only on earnings from work actually (physically) done within the state of California.

 

Talk to your payroll department.

 

To obtain a refund of the incorrectly withheld CA taxes, at year's end file a non-resident CA tax return and allocate zero income to California.

 

 

Level 15
Oct 25, 2021 3:55:56 AM

The above answer applies to regular W-2 employees.  If you are a contract employee, receiving a form 1099-NEC, instead of a W-2, the answer is different.   Due to a 2019 court ruling in CA, if you are a sole proprietor and you provide services to a client located in CA, that income is taxable by CA - even if you never set foot in California.  

Reference: https://www.coblentzlaw.com/california-office-of-tax-appeals-gives-precedential-authority-to-bindley-decision-nonresident-sole-proprietors-out-of-state-services-to-california-customers-could-trigger-california-filing-requirem/