How does California tax remote workers?
There are a few situations to consider. You may fall into more than one category.
- I lived in California (resident or part-year resident).
- If you're considered a full-year or part-year resident of California, you'll be taxed on all income earned from any source during your time of residency. Be sure to file the appropriate return.
- I worked remotely while in California (any residency).
- Even if you're a nonresident, California taxes income earned for personal services performed while in California. This includes remote work for an employer or clients based outside California if you were physically in the state while doing the work. Your employer is required to withhold California income taxes at the start of your employment. Please check with your human resources or payroll department for withholding requirements in California.
- You may be able to claim a credit for taxes paid to another state on your resident return for any income required to be reported in multiple states. California has a nonresident reverse credit for the following states and territories: Arizona (AZ), Guam (GU), Oregon (OR), and Virginia (VA). If you live in one of those states or territories, the credit is claimed on the nonresident California return rather than the resident return.
- I didn't work in California at all but my employer was based in California (nonresident).
- If your employer was based in California, they may have withheld California taxes from your California wages as shown on your W-2. However, if you didn't live or physically work in California, you won't owe California taxes on those wages and can file a nonresident return to claim a refund of those withholdings.
- If you are a California nonresident, you did not physically work in California, and your employer didn't withhold California state taxes, you probably don't need to file a California return at all.
