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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14471
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Dear Tax Professional, If a taxpayer who receives W2 Income

Resolved Question:

Dear Tax Professional,

If a taxpayer who receives W2 Income in a Company that incorporated in California, but the Company allows him to work from home, therefore, he works in a foreign country. In this case, do you think it is subject to California Income, so he has to file California Tax Return?

Please advise!
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Customer:

Thanks!

MyVirtualCPA :

If the taxpayer does not live in California they are not required to pay taxes to the state of California

Customer:

Even though the source income he receives is from a Company that incorporates in California?

MyVirtualCPA :

Correct. He does not have a business in california and he does not live there, therefore he owes no tax to California

Customer:

Are there any source code that I could refer to?

MyVirtualCPA :

I do not have code reference

Customer:

What about if he used to live in California, but just because he got this work-from-home job, so he left California and worked in the foreign country since the Company allows him to do so..

MyVirtualCPA :

So he was a California resident before leaving the country?

Customer:

yes

MyVirtualCPA :

Then, he's still a California resident and owes Caliornia tax

Customer:

but how about he left CA for a long time?

MyVirtualCPA :

Still considered a California resident

Customer:

I heard there is a rule..which is if he left the state more than 564 days because of employment contract

Customer:

he is not considered CA resident

MyVirtualCPA :

Let me check

Customer:

Thanks!

MyVirtualCPA :

You can find the information, here: https://www.ftb.ca.gov/forms/2010/10_1031.pdf

Customer:

Could you please give me some advises? I have read those rules

Customer:

but I am not sure about how to apply in this particular case

MyVirtualCPA :

The rule would be in this document

MyVirtualCPA :

We don't provide advice, rather general information.

Customer:

Could you please show me which page that describes about it?

MyVirtualCPA :

I don't know.

Customer:

I see.....thanks

MyVirtualCPA :

I would say he's not a resident.

Customer:

if he left the state more than 564 days4

Customer:

?

MyVirtualCPA :
A

resident

is

any

individual

who

meets

any

of

the

following:


Present

in

California

for

other

than

a

temporary

or

transitory

purpose

.


Domiciled

in

California,

but

outside

California

for

a

temporary

or

transitory

purpose
MyVirtualCPA :

Ooops that didn't copy well

MyVirtualCPA :

A resident is described as someone who is in California for something other than a transitory purpose

MyVirtualCPA :

or who is outside of California, but only for a temporary period of time.

MyVirtualCPA :

I would say if he's been out of the country that long he is no longer a California resident

MyVirtualCPA :

Look at page 3, example 2

Customer:

let me check..

MyVirtualCPA :

it discusses someone who works for a German company and is stationed in Germany for two years. Even though they came to California for a 3 week vacation, they are still considered not a CA resident

Customer:

got that..

Customer:

thanks for your help

MyVirtualCPA :

You're welcome

MyVirtualCPA :

Please rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

so he does not need to report his company's income in CA return?

MyVirtualCPA :

Correct if he is not a CA resident

Customer:

Got that, thanks!

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14471
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 9 other Tax Specialists are ready to help you

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