Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I work totally from home in WA (no state income tax) and my employer is in CA. They deduct CA state income tax from my paychecks. The last couple of years since I have moved away from CA, I got about 60% of the CA state tax back as a refund, but I don't know why I should be paying any tax to CA. A coworker who is in the same situation said she told our payroll department to stop deducting CA tax, but this is her first year of employment with my company so she doesn't yet really know if she'll owe a little CA tax. I don't want to risk owing anything, so I continue to let them deduct it from my checks. I don't own property in CA or anything like that. Any ideas?
Your company should not be withholding California income tax. They should have a WA state tax ID so they can pay your unemployment and disability taxes/insurance to WA. Is your employer a small company that does not want to deal with getting a tax ID in Washington state? Do they claim you work in CA?
I would probably claim a refund for ALL California income tax until the withholding issue is resolved.
Your company should not be withholding California income tax. They should have a WA state tax ID so they can pay your unemployment and disability taxes/insurance to WA. Is your employer a small company that does not want to deal with getting a tax ID in Washington state? Do they claim you work in CA?
I would probably claim a refund for ALL California income tax until the withholding issue is resolved.
They are a large hospital system with a dozen or so hospitals in a few west coast states (most in CA, none in WA) so I don't know if they have a WA state tax ID... I don't think they claim I work in CA (they use my WA address, direct deposit to my WA bank). They have more and more employees working for them from out of state so you'd think they would have this set up.
I don't know their reasoning for withholding CA state income tax. I can only guess "its the way we've always done it" or "that's the way our payroll system is setup". Payroll systems from ADP or Paychex make it easy to deal with out of state employee's and tax withholding. They may have to fill out a few forms to get the tax ID, but that's what they should do. When I worked from home, my employer got a tax ID for my home state, and when I moved, they got another tax ID for the new state. They never withheld taxes where their corporate office was located because I did not work there. I know someone who worked from home for a large CA computer company. His main office was his house and they withheld taxes for his home state. I would talk to your payroll or HR office and get it straightened out and claim a full CA tax refund and amend previous CA returns to get your money back. If they ask you to explain the amended return, just tell them you never worked in California. You'd need to amend your federal returns as well to account for the CA refund. Since this amount will be many thousands of dollars, I would say its worth the effort.
In our case it was New York and Tennessee. We lived in Tennessee and the company was in NYC. Like WA TN doesn't have state income tax which I think makes it easier for the other state to withhold for themselves. The company insisted on withholding all NYC taxes. It actually had something to do with a supreme court decision about telecommuting. Although our CPA said it may actually have to do with have a "presence" in another state and therefore they could be sued in another state. I don't know the real reason.
Here's an article on the court case. Telecommuters: Beware the tax man - CNET News
However, our CPA disagreed and we were able to get a full refund every year on those NYC taxes, although we never were able to convince the company in NYC otherwise. Get a good CPA is all I can recommend. Good luck!
NYC is a separate case because they have nexus rules and are very $ hungry. When I first started working at home I came across the NYC situation. I am not sure if yours was the case I was reading about!
Either way, if the OP cannot get his employer to stop withholding, he can claim a refund.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,576 posts, read 81,167,557 times
Reputation: 57808
I hear about this a lot from people that live in WA and work for CA companies, including professional athletes. It also came up when a friend moved up here and retained part ownership in a business in CA. CA income tax is based on CA source income. If you are paid by a company in CA you pay income tax whether you live there or not. That's the law there.
If an athlete plays a game in California, they are working in California and are liable for California income tax based on the number of games they played. The original poster is not working in California and is not living in California. Therefore he owe's no California tax. Even if he owned a 2nd home in California he would not pay tax to California unless he did work while living in his second home or lived there most of the year.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
