California Non-Resident Income Tax question

[slynne]

Sooooo. Things are happening and it might be possible for me to have enough money to buy the class B of my dreams by December. I have a friend in California with land I can park on (And OMG they are going to put in power, water, and internet hookups for me!) and I want to stay 4 months. 

Does anyone know if I have to pay income tax to California if working for a Michigan company while I also still a Michigan resident? I will be physically performing the work in California. I already know that if I visit clients in-person in California, I will have to pay California Non-Resident taxes for those days and than go through the bother of getting a refund for those taxes from Michigan. I am less sure about phone or email interactions. 

Anyone have any experience telecommuting in California and with their income tax rules? 

I hate to admit this but I have done this before. My employer gave me a W2 with all the withholding for Michigan and as it never even occurred to me that I might owe taxes in another state, I never filed.  But it is important for me to be honest about my taxes so in addition to looking ahead to next winter, I am trying to figure out if I need an amended return. I know I wont owe money because Michigan will give me a credit for anything I pay CA. So there is that

 

[frater secessus]

Watching with interest.

My reading suggests California uses the "where services were rendered" approach, which would mean you will pay CA tax. My cynical addendum is that even if it wasn't required CA would still try to capture the revenue. Small-S "states" being what they are.

 

[John61CT]

Best would be advice from a tax preparer with relevant experience.

Doesn't have to be a fancy pant$ one, those helping migrant workers don't charge much.

Don't focus too much on the "honesty" and "morality" side, many rules are open to interpretation from both sides.

Important issues are the practical ones, for low risk of flagging an audit, let them know you just want to pay what's owed, find out what's the most common usual approach.

 

[Travelmonkey]

You're supposed to pay taxes to CA on income earned in the state. I've heard pro athletes file state income taxes in every state they have an away game. Crazy!

That being said, if I had a W2 from a company based in another state mailed to my mail forwarding address in that same state, I'm not sure I would pay CA tax... I can see why you don't want risk anything with MI reimbursing you on outside state taxes, but if it were another state with say no reimbursement or no state taxes... I probably wouldn't if I thought I would get away with it...

 

[OregonDeb]

Not sure about California - I know that Oregon requires folks who work part-time in state and part-time out of state to file taxes on the portions worked in the state. Not sure what the percentage of in vs. out is. As noted in a previous post, you might what to check with a tax preparer.

 

[slynne]

Watching with interest.

My reading suggests California uses the "where services were rendered" approach, which would mean you will pay CA tax.  My cynical addendum is that even if it wasn't required CA would still try to capture the revenue.  Small-S "states" being what they are.

I think the [font=Verdana, Arial, sans-serif]"where services were rendered"  part is confusing. If I am in California talking to a customer in NYC on the phone, wouldn't the services be rendered in New York? I am pretty sure if I were to visit a California customer in person, I would owe the tax for that day. 

Ah well, thanks to you all! I may have to take the advice to talk to a tax preparer but perhaps I will wait a couple of months until after tax season. [/font]

 

[John61CT]

Until the NSA gives the tax authorities access to our comms, that's really up to your discretion.