Question

Non Resident Income

Forum|Forum|3 years ago
July 19, 2022
1 reply
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I reside permenentely in Ohio, but am working as a contractor on asignment for a company based in California, fully remote from Ohio. I never go to CA for my job. Am I being taxed by both CA and OH, or just OH? Or am I being taxed by my contracting agency only? How will this work as far as tax states?

TurboTax Basic Windows

A

Anonymous_

Employee

See https://www.ftb.ca.gov/file/personal/do-you-need-to-file.html

If you California source income, you need to file a California return.

N

NCPERSON1

@JM136 - unless you step foot in California, none of your income is 'California sourced'. You would only pay tax to Ohio as that is where you work and reside.

"California sourced" refers to whether you generate the income while in CA, not that the organization who you perform the work for is located in CA. Otherwise every Disney employee working in Florida would have to pay tax to CA as that is where Disney is located.

good article here:

https://moskowitzllp.com/what-is-california-source-income/#:~:text=If%20you%20are%20a%20nonresident,is%20taxable%20in%20the%20state.

from the article:

"If you are a nonresident with a business, trade, or profession that conducts business both within and outside California, the income generated from business you conduct within California is California source-income and is taxable in the state.

Since you are not setting foot in CA, you do not owe tax to CA. if you go travel to the client for let's say a week, then yes, that is CA sourced income and taxable to CA (but you'll get a credit from OH so you are not taxed twice on the same dollar of income)

T

TomD8

Employee

@NCPERSON1 's answer is correct, assuming you're a W-2 employee. But if you're being paid as an independent contractor - meaning you'll receive a 1099-NEC at year's end rather than a W-2 - then any work you do for a California-based client would be taxable by CA.

If you are a W-2 employee, be sure your employer withholds Ohio taxes from your pay. If they do not, then you'll have to make quarterly estimated tax payments to Ohio. See this reference for the details about that:

https://tax.ohio.gov/individual/resources/estimated-payments

**Answers are correct to the best of my ability but do not constitute tax or legal advice.