Question

Taxes for Remote Workers

Forum|Forum|2 years ago
November 13, 2023
2 replies
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I'm currently living in California, But I work Remotely for a company based in Arizona How will that work for my taxes, I can still file taxes in California? and I will deductive AZ percentage for state withhold?

Employee

Employee

You must still file a California tax return. California taxes you as a resident on ALL your income, regardless of its source.

Arizona does not tax non-resident remote workers. If you never actually (physically) worked in AZ, then your work income is not taxable by AZ. If your employer mistakenly withheld AZ taxes, then you must file a non-resident AZ tax return, on which you declare zero AZ income, in order to receive a full refund. On your CA return, you may not claim a credit for the incorrectly withheld AZ taxes.

You should ask your employer to withhold CA taxes from your pay. If you will never work in AZ, then you should also ask them to cease withholding AZ taxes from your pay. If they will not withhold CA taxes for you, then you must make quarterly estimated tax payments to CA. See this:

https://www.ftb.ca.gov/pay/estimated-tax-payments.html

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

O

Opus 17

Employee

In addition to the above, if you do work in Arizona occasionally (for example, 2 weeks each year for training), that income is taxable to the state of Arizona on a non-resident tax return. You still report all your world-wide income and pay tax to the state where you live, but California will give you a partial credit for taxes you paid to Arizona to offset the effects of double taxation.

T

TomD8

Employee

"...California will give you a partial credit for taxes you paid to Arizona..."

Not correct. Just to be nit-picky: CA and AZ are "reverse-credit" states. That means that the "other state credit" (when applicable) is granted by the non-resident state. A CA resident with AZ-taxable income would claim the credit on his non-resident AZ tax return, not on his CA tax return.

CA will not give a credit for taxes paid to AZ.

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