However, if you had "deferred" or Equity-Based Compensation, you may still have California sourced income. Generally, if you are a nonresident and all services were performed outside of California, this would not be California sourced income. Do you need to file a California return and pay California income tax?Īnswer: Maybe. Similar to Scenario 1, except you perform all of your services outside of California after relocation. Visit FTB Publication 1004 for more information.
There are special rules for "deferred" or Equity-Based Compensation. % Ratio x Total Income = CA Sourced Income One way to calculate the portion of your income that is California sourced is to multiply your total amount of income for the year by a ratio of your total number of days performing services in California over your total number of days performing services worldwide. You will need to file a California Nonresident or Part-Year Resident Income Tax Return (Form 540NR), to report the California sourced portion of your compensation. Income from California sources while you were a nonresidentĭuring the nonresident portion of the year (or if you are a full-year nonresident), you will have California source income to the extent you physically performed services in California.All worldwide income received while you are a California resident.If you are a part-year resident, you pay tax on: Do you need to file a California return and pay California income tax? You periodically travel to and from California in order to perform services for your employer. You relocate to another state and continue to work remotely for a California employer. Equity-based Compensation Guidelines (FTB Publication 1004).Taxation of Nonresidents and Individuals who Change Residency (FTB Publication 1100).Guidelines for Determining Resident Status (FTB Publication 1031).Visit the following publications for more information: As a part-year resident, you pay tax on all worldwide income while you were a resident of California.
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