CA W-2 issued to NV resident

[joshuabarksatlcs]

Never ran into this.  Any suggestions?

Client works for a national non-profit organization and was transferred to Nevada.  His salary is funded by the CA office for three years.  W-2 issued from the CA office and marked CA.  Work is done in the  Nevada desert.  Visits CA for less than 3 weeks a year.  NO withholding for income tax.  He doesn't care about SDI (disability insurance).   All facts support he's a NV resident

Question: how to handle the filing with a W-2 issued by an office in CA marked as CA for the state?

File CA Part year resident in the year of move (2022) and CA non-resident return for the next few years? 

[qbteachmt]

Visiting CA isn't the same as "went to the main office, and that is 3 weeks of work in CA."

"Remember, the income sourcing is determined by the location where the employee services are actually performed, not the location of the employer. A nonresident programmer who monitors and upgrades satellite dish software for a Los Angeles-based media company, all while sitting comfortably in front of his computer in his Austin, Texas condo, doesn’t earn California-source income and doesn’t have to pay California income taxes, as long as the work is performed outside of California."

From: https://www.palmspringstaxandtrustlawyers.com/nonresidents-working-remotely-for-california-businesse...

[sjrcpa]

I would not file a part year CA return if he never lived in CA.  Or file part year if he did live in CA for part of the year. I can't tell. " was transferred to Nevada" You don't say from where.

The income earned during the 3 weeks in CA is probably taxable by CA - on a CA nonresident return.

Your client needs to get correct paperwork filed with the payroll dept of his employer to show he is not a CA resident.

[joshuabarksatlcs]

He was transferred to NV from CA.  Before the transfer in 2022 he was a longtime CA resident.

3-week Visit = vacation.

I know the income source rules.  He completely moved to NV due to the transfer and performs his work after the transfer 100% in NV . 

I just wonder, when a non-resident is issued a CA W-2, what would be the best way to report.  I still think 2022 part-year resident and 2023 2024 and 2025 non resident returns would be logical.

HR says because the budget is from the CA branch, the W2 has to show CA, and employee has to take care of the tax reporting. Technically, the nature of the work would not prohibit an employee from perform some work in CA except that Client completely moved to NV - sold the CA house, bought a (bigger) house in NV, registered the car and driver's license in NV etc.

Can't argue with internal policy of the organization, or HR.  

[sjrcpa]

Then part year CA for 2022.

No nonresident CA taxable income for the 3 week visit/vacation.

[joshuabarksatlcs]

I didnt make this clear - Client expects CA W-2 for 2023 2024 and 2025 also. 

I was thinking if no return was filed for 2023 2024 and 2025 while getting the CA W-2 for those years, California would send a bill.

[qbteachmt]

There is no CA tax liability for this: "Client expects CA W-2 for 2023 2024 and 2025 also."

That's a Fed W2. With a CA company. Not CA income, unless there is work done in CA. The source is where done and not that the business has a CA address or presence.

"Your client needs to get correct paperwork filed with the payroll dept of his employer to show he is not a CA resident."

Since there was no CA withholding, it seems they already have this info. If they marked all the money as CA for State allocation, that would be wrong. It's not the issuing of the "CA" W2 that matters. It's how it is showing info and how that money was earned. And since NV doesn't have State income tax, there is no other state tax offset. We can't see what this looks like, of course.

"I was thinking if no return was filed for 2023 2024 and 2025 while getting the CA W-2 for those years, California would send a bill."

Typically, for multi-state, there is the break down by state on the W2, and CA would show $0.

Your taxpayer was a resident of CA for some of 2022, and that makes it Part Year resident for tax filing.

There is only Nonresident tax filing if the person worked in CA while not being a resident of CA.