California 540NR help

[TAXMAN]

If TP lives in other state but gets paid from a CA based employer(did no work in CA) must they file a CANR. CA employer withheld CA tax and it appears TP will owe additional $ on the amount from this employer. Could this be correct?

[MsTabbyKats]

If he lived and worked in another state, he shouldn't owe CA tax. You can file an NR to get it back.

The employer should have withheld for the taxpayers home state. So, he'll have to pay that.

ETA-What is the taxpayer's address on the W-2?

Is it a CA address (which he shouldn't have if he didn't live there)?

[kcjenkins]

Get documentation from the employer RIGHT AWAY that he did no work in CA and that it was an error on the W2 because CA will assume it's CA income based on that withholding. Taxpayers address means nothing about where the income was earned.

[easytax]

Had a client that worked only in PA for a NY firm. We had to do the PA 40 (state return) and also do a NR form for NY which also had to include spouses dollars (his firm and work place all in PA). Just had to work through NY's NR form and work everything back out that wasn't NY related.

Point being NY insisted since NY firm home, they wanted their (NY) money.

You may be there with CA now too.

[Mr. Pencil]

If TP lives in other state but gets paid from a CA based employer(did no work in CA) must they file a CANR. CA employer withheld CA tax and it appears TP will owe additional $ on the amount from this employer. Could this be correct?

First find out why the employer sourced it to California. I would guess that the employer is wrong, but there are some reasons why they may be right. There is no easy fix. He can file to recover the CA withholding, but only by reporting his world-wide income. AND there is probably almost $1000 in State Disability withholding, which he can't get back except from the employer. Meanwhile he might have an underpayment to his home state.

[ed_accountant]

This is common for small employers who do their own payroll to do it wrong. Small employers who are only setup for payroll in their home state do not know that they have to withhold and get set-up in the employee's state .

The employer will not want to open this can of worms. Late filing penalties, amended returns and etc..

Is your employee still working for this company?

If so he should ask the company to correct or pay the difference in the increase in state taxes plus extra tax fees.

[Guest Taxed]

>>> If TP lives in other state but gets paid from a CA based employer(did no work in CA) must they file a CANR

How do you define no work in CA?

Let me give you a real example with one of my clients.

She is a claims/investigation person for an insurance company in the next door state of CT. She lives in MA and works out of her home office in MA. She does have to go to the employer's claims office in CT when required.

For the last few years no CT taxes were witheld just MA. Then for 2013 the company started witholding CT taxes. She inquired and was told that their tax/law dept had reviewed the CT regs and they feel that they should be witholding CT taxes also. So now we fill file a CT non resident and adjust the MA resident return for 2013.

[TAXMAN]

Thanks be to all. I got it figured out. TP ain't happy but I didn't create the problem.