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Level 3

Working remote in Washington - need to pay California taxes on ISOs?

Let's say someone work remotely at Washington for a California startup as a W-2 worker. They work 100% remotely at Washington (no short-term assignment at California). It is known that they do not need to pay California taxes for their non-ISO compensation like base salary and bonus: refer my previous question 

 

However, this time, they are also granted with some ISO options. 2 questions:

 

1. They exercise the options while still at Washington after the options vest. Do they need to pay the AMT California taxes?

2. They later sell the exercised shares while still at Washington too. Do they need to pay the regular California taxes?

 

 

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Accepted Solutions
Employee Tax Expert

Working remote in Washington - need to pay California taxes on ISOs?

Since you never worked in California, none of the income would be taxable there. It would be different if you worked there and then moved away, then your stock option income would be forever taxable.

 

It comes down to "California Sourced Income", which means income earned when you worked in California.

 

You can read more about it here, see E. Stock Options:

 

https://www.ftb.ca.gov/forms/misc/1100.html

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Employee Tax Expert

Working remote in Washington - need to pay California taxes on ISOs?

Since you never worked in California, none of the income would be taxable there. It would be different if you worked there and then moved away, then your stock option income would be forever taxable.

 

It comes down to "California Sourced Income", which means income earned when you worked in California.

 

You can read more about it here, see E. Stock Options:

 

https://www.ftb.ca.gov/forms/misc/1100.html

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

View solution in original post

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