[SI-LIST] Caution to those who live outside of California and got there on business!!! (Don't)

  • From: Doug Smith <doug@xxxxxxxxxx>
  • To: emc-pstc <emc-pstc@xxxxxxxx>, Si-List <si-list@xxxxxxxxxxxxx>
  • Date: Tue, 02 Sep 2014 14:37:05 -0700

Hi All,

Just a note to those of you, especially consultants, but potentially 
anyone who visits California, even for a day, on business.

CA has new rules that require companies there (they don't all know about 
it yet but will be in trouble after the first of the year if they don't) 
to withhold CA income tax from payments made to people from out of state 
if any of the work was done in CA.

You need to fill out a tax form for every job/trip! It is "California 
Form 587, Nonresident Withholding Allocation Worksheet." In my case the 
client ignored the form and sent the maximum 7% of the gross proceeds in 
to CA.

The company for whom you do work is required to deduct 7% from the gross 
payment to you, no allowance for expenses or, at least for the last job 
I did, the fact the job required 3 days in NV and two in CA. They took 
out 7% and sent it to the CA state government.

The accounting for this is going to be tricky as you have to keep track 
and justify how much of the work was in CA and how much elsewhere. In 
the end, CA may extract up to 10% of your payment, 13% if you are really 
well off. I suspect the accounting and submitting tax forms will cost as 
much as the tax, or more.

So starting now I am dividing my fee by 0.93 to cover the tax and 
probably need to at least double that to cover my time and the 
accountants time to keep track of all of this. I am thinking along the 
lines of $500/day additional to CA companies until I get a better idea 
of what this is going to cost.

Although we don't have an income tax in NV they get it in other ways, 
such as $2000/year from me for a special rental car tax meant to hit 
tourists, as well as other taxes. I you come in from Massachusetts, for 
instance, you will be required to pay MA and CA income taxes! That plus 
Federal will be over 50% for most engineers (CA is 10% at $44,000 per 
year).

I am interested to find out if I am the first person to run into this. 
If you go into CA for work purposes you will be hit for this. I plan to 
ask the CA tax people which precinct they are going to allow me to vote in.

Doug

-- 
University of Oxford Tutor
Department for Continuing Education
Oxford, Oxfordshire, United Kingdom
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      ___          _            Doug Smith
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        =========               Boulder City, NV 89006-0941
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   /  /\  \ ] /  /\  \          Mobile:  408-858-4528
  |  q-----( )  |  o  |         Email:   doug@xxxxxxxxxx
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