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JKCPA
JKCPA, CPA
Category: Tax
Satisfied Customers: 5765
Experience:  CPA with tax experience.
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Hi, I am considering taking a job from a company that is based

Customer Question

Hi, I am considering taking a job from a company that is based in California. I will be working as a Regional Sales Director working out of my home, remotely, in Texas.

All work will be done in Texas....Do I have to pay California taxes since Texas is a NO state income tax state??

How does this work?? Thank you!
Submitted: 4 years ago.
Category: Tax
Expert:  JKCPA replied 4 years ago.

Hello,

Thanks for your question.

Yes, this would be considered CA source income. Nonresidents of California who receive California sourced income have to file a non-resident state tax return, Form 540NR, if they receive more than the minimum filing amounts required to file a CA return -this can be found here. California taxes the income you received from California sources if you are a resident of another state. Since Texas has no state income tax, you would file CA state income tax as a nonresident.

Best regards,

Expert:  JKCPA replied 4 years ago.

Hello again,

 

I apologize but please disregard the above statement. I was looking at the tax rules in the CA non-resident booklet but then on this page, it states "Compensation is considered earned where the payee performs the services"

 

So, the fact that your employer/payer is based in California does not make your compensation taxable. It's the place where the payee performs the service that makes the compensation taxable. Since you are in TX and TX has no state income tax, this will not be taxable at the state level.

 

If, however, you visit your CA office during the tax year, even for a day, you will have to prorate your compensation out for those days while actually in CA.

 

Thanks.

 



Edited by JK_CPA on 9/2/2010 at 4:11 AM EST

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