CA Paying an Out of State NV Employee

There is nothing unique about this situation.

Not if the work is performed in Nevada.

True.

The income is sourced where you perform the work. Work in Nevada, it is Nevada income.

-- Alan

This might be one of those rare situations where a CA company could benefit from a NV registration. But in general, where the check comes from is not binding on where the income is earned. Katie might have a different take vis a vis CA Franchise Tax Board.

-- Tom Healy, CPA Boulder, CO Web:

The source of income from personal services is the place where the services are performed. Your employee has no California source income unless he performs services in California. If he does spend some time on the employer's business in California, the employer should withhold CA tax to that extent, and the employee should file a nonresident California income tax return to report the income and show the withholding as a credit. As long as no services are performed in CA, no CA tax and no withholding. You might get a different answer in some states. In NY, for example, if the employee spent ANY time in NY, ALL of his compensation would be considered NY source income. Not so in CA. Katie in San Diego

The foregoing is intended for educational purposes only and does not constitute legal or professional advice.

If an employee never sets foot in CA, how can CA tax their wages?? The income is source where it is earned: Nevada

-- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062