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Here is a better way to word this from the publication for California:
https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf
Nonresidents of California are taxed only on income from California sources.
Wages and salaries have a source where the services are performed. Neither the location of the employer, where the payment is issued, nor your location when you receive payment affect the source of this income.
A nonresident’s income from California sources includes income from a business, trade, or profession carried
on in California. If the nonresident’s business, trade, or profession is carried on both within and outside California, the income sourced to California may be based only on the business conducted within California, or may be determined by using the apportionment formula for corporations engaged in multistate businesses.
Here is the part about out-of-state contractors needing to pay tax on income if the purchaser of the service receives the benefit of the service in California. This does not apply to wages to an employee described in the earlier post above as tax on those are only determined from where the services are performed.
A nonresident may have California sourced income or apportionable business income if receiving income from sales or services sourced to California. Such income includes:
Sales of services to the extent that the purchaser of the service receives the benefit of the service in California.
The online help that should be improved is the following:
https://turbotax.intuit.com/tax-tips/state-taxes/multiple-states-where-to-file/L5NxnNH21
The underlined portion should be reworded as it could imply that employee wages from a company located in another state would be taxable, but that is not true unless the services were performed in that state (at least for California). The source rule for California is complex in that for employee wages it is where the services are performed (NOT where the business paying wages is located nor where the paycheck comes from) while for contractor (i.e. Schedule C) business income it is where the purchaser of the service receives the benefit that matters (so sales or support to a customer in California would be taxable).
You are a Nonresident of a state if you did not live in that state at any time during the tax year, but you did receive income from that state because you:
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