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January 25, 2025
Question

Why am I not getting a refund for califonia state income tax as a nonresident?

  • January 25, 2025
  • 1 reply
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I lived in California for 10 weeks during training and made less than $10k. Although my home state of Texas does not have reciprocity with CA, I should have only had to pay 1%. I paid $230 and am only being refunded $3. What did I do wrong?

    1 reply

    January 25, 2025

    California doesn't apply a tax rate to just your California income; this is presumably why you didn't get the result you expected.

     

    As a nonresident of California, you pay tax on your taxable income from California sources. The method California uses for calculating tax for nonresidents uses the percentage of your California income to your total income, rather than a tax rate applied to just the California income.

     

    Sourced income includes, but is not limited to:

     

    • Services performed in California
    • Rent from real property located in California
    • The sale or transfer of real California property
    • Income from a California business, trade or profession

    California uses its own method for calculating the tax of part-year residents and nonresidents. If you are a nonresident or a part-year resident, you determine your California tax by multiplying your California taxable income by an effective tax rate. The effective tax rate is the California tax on all income as if you were a California resident for the current taxable year and for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions, divided by that income. Use the following formula:

     

    Prorated tax = CA taxable income × Tax on total taxable income ÷ Total taxable income

     

    You can see the calculation on lines 31-42 of Form 540NR for 2023. California doesn't have the 2024 Form 540 NR posted yet on their website.

     

    Please see this California Franchise Tax Board webpage for more information. 

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