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Remote work for a CA company and State Tax on entire year income?

I worked for the same CA company in 2022, but in August I moved from WA to CA. I thought I'd only need to pay CA State Tax for the period after I've moved to here in August, but the CA Tax Department website says the following:

 

"As a part-year resident, you pay tax on:

  • All worldwide income received while a California resident
  • Income from California sources while you were a nonresident"

Does it mean I need to pay CA State Tax for my entire year's income? BTW, my company does not have an physical office in WA. Could someone help and advice? Thank you.

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1 Best answer

Accepted Solutions
ErnieS0
Expert Alumni

Remote work for a CA company and State Tax on entire year income?

No. You only have to pay California tax for the period of time you were physically working in California.

 

Here is an example provided by the Franchise Tax Board:

 

You relocate to another state and continue to work remotely for a California employer. You periodically travel to and from California in order to perform services for your employer. You receive a W-2 from them. Do you need to file a California return and pay California income tax?

 

Answer: Yes.

 

If you are a part-year resident, you pay tax on:

  • All worldwide income received while you are a California resident
  • Income from California sources while you were a nonresident

During the nonresident portion of the year (or if you are a full-year nonresident), you will have California source income to the extent you physically performed services in California. You will need to file a California Nonresident or Part-Year Resident Income Tax Return (Form 540NR), to report the California-sourced portion of your compensation. 

 

One way to calculate the portion of your income that is California sourced is to multiply your total amount of income for the year by a ratio of your total number of days performing services in California over your total number of days performing services worldwide.

 

CA Workdays / Total Workdays = % Ratio

% Ratio x Total Income = CA Sourced Income

 

See Scenario 1 in Part-year resident and nonresident

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1 Reply
ErnieS0
Expert Alumni

Remote work for a CA company and State Tax on entire year income?

No. You only have to pay California tax for the period of time you were physically working in California.

 

Here is an example provided by the Franchise Tax Board:

 

You relocate to another state and continue to work remotely for a California employer. You periodically travel to and from California in order to perform services for your employer. You receive a W-2 from them. Do you need to file a California return and pay California income tax?

 

Answer: Yes.

 

If you are a part-year resident, you pay tax on:

  • All worldwide income received while you are a California resident
  • Income from California sources while you were a nonresident

During the nonresident portion of the year (or if you are a full-year nonresident), you will have California source income to the extent you physically performed services in California. You will need to file a California Nonresident or Part-Year Resident Income Tax Return (Form 540NR), to report the California-sourced portion of your compensation. 

 

One way to calculate the portion of your income that is California sourced is to multiply your total amount of income for the year by a ratio of your total number of days performing services in California over your total number of days performing services worldwide.

 

CA Workdays / Total Workdays = % Ratio

% Ratio x Total Income = CA Sourced Income

 

See Scenario 1 in Part-year resident and nonresident

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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