South Dakota Unemployment Insurance Tax Law Change | How to navigate California employer, South Dakota full-time traveler residency

[gr3mmo]

I am domiciled in South Dakota as a full-time traveler. I use a Personal Mailbox (PMB) as my primary address.

I work full-time (remote) for company based in California.

I am based internationally and have not visited the US all year (will visit family in CA for 2-3 weeks for holidays).

My employer has been contacted by SD stating they are unable to register my company since they no longer recognize PMB addresses for Unemployment Insurance Tax collection.

From South Dakota law change (2023): legal full-time-traveler resident of SD cannot pay into unemployment...

"My problem started in 2023 when SD updated their laws (see: 61-1-3. Employing unit defined   ; 61-1-26. Service within and without state included--Base of operations or residence as basis for cov... ; 61-1-27. Service considered within state--Services in more than one state. ) to not allow out-of-state employers to pay into SD unemployment for their SD employees."

Questions:

• What do I need to file?
• What does my employer need to do?
• How does my international base affect my tax liability in CA?

[TomD8]

Your tax obligation to California depends on whether you are a paid employee (your earnings are reported to you on a W-2), or an independent contractor (your earnings are reported to you on a 1099-NEC).

CA taxes non-residents only on CA-source income.  If you are a W-2 employee, and you never physically work within CA, then your work earnings are not CA-source and are not taxed by CA.  

However, if you are an independent contractor, then any income you receive from clients based in California is considered CA-source income, and is taxable by CA.

This is an income tax forum, and questions about SD's unemployment laws are beyond its scope.