Business Trip to California - Do I need to file taxes?

[Cordivae]

I spent 4 days in California last year for a business trip and it showed up on my W-2.  Do I need to file California State taxes?

Tax Act wants $39 to file them, and going through the form doesn't seem to adjust for the fact that I was only there for such a short time.  Its wanting ~10k for Cali State taxes.

My W2 only lists State Wages / Tips as $14.82 which seems rather low.  I'm not really sure how this is calculated.  Is there a guide on this?

[dandarc]

https://www.ftb.ca.gov/ is the website for California's tax board. Seems like the software might be interpreting you as living and/or working full time in California, which is probably wrong. Unless the 4 days in California earned you $100K+, seems unlikely $10K is the correct amount tax.

https://www.ftb.ca.gov/forms/2015/15_1031.pdf would be a good thing to read - appears as a non-resident, you owe on "California Sourced Income".

[SimpleCycle]

What do you mean it shows up on your W-2?  As in there are California earnings and California withholdings?

For a business trip, you would still be considered to be working in your home state for tax purposes.  You don't pay state taxes for business trips, that would be a fiasco for frequent business travelers.

[Cordivae]

Based on what I've read and my friends say, it seems to be otherwise.  Maybe because my Employer is located in California.

On my W2 item 15 is the State Employers ID for CA, 16 has State Wages of 14.82, and 17 has like 1.44 for state income tax. 

I'm wondering if I have to file a 540NR because of this.  I could care less about my refund on $1.44... I just want to ensure I don't get in trouble for not filing.

[dandarc]

Might be an even better thing to read, as it is more recent and specific to non-residents - https://www.ftb.ca.gov/forms/2018/18-540nr-booklet.html#Do-I-Have-to-File-

Seems to indicate that you are supposed to file if your income (from all sources - even outside of California) is above the stated amounts.

[dandarc]

For a business trip, you would still be considered to be working in your home state for tax purposes.  You don't pay state taxes for business trips, that would be a fiasco for frequent business travelers.

This just isn't true. High-profile example is "professional athlete" - often many states and even multiple countries are owed taxes for them.

For practical purposes, you're probably right for most people. States probably aren't chasing folks down all over the country for even a few hundred dollars in taxes owed, but the laws on this vary substantially.

[SimpleCycle]

For a business trip, you would still be considered to be working in your home state for tax purposes.  You don't pay state taxes for business trips, that would be a fiasco for frequent business travelers.

This just isn't true. High-profile example is "professional athlete" - often many states and even multiple countries are owed taxes for them.

For practical purposes, you're probably right for most people. States probably aren't chasing folks down all over the country for even a few hundred dollars in taxes owed, but the laws on this vary substantially.

I don't understand this at all.  I travel for business, to many different states, and my employer always reports my income in Illinois and withholds taxes in Illinois.  This is true whether I travel to our corporate headquarters (although Texas has no income tax) or to a client site in a state we don't have an office.  This has been the case at several different employers, but based on some quick reading it appears my employers may just be unaware of their tax reporting requirements.

[dandarc]

@SimpleCycle -

The usual rule is that you owe taxes on all income in your resident state. But you typically get a tax credit there for income taxes paid in other states, so you are not double-taxed.

Then you owe taxes only on income earned in that state for non-resident states. Each state sets their own rules regarding when you might owe taxes to that state. Some states, you technically owe taxes in the first minute you work there. Other states have an income limit you have to hit before you owe in that state.

Simplifying matters for the majority, but adding yet another layer of rules - several states have reciprocity agreements in place, which usually means if you live in one / work in one of those states that yours has a reciprocity agreement with, you'd only owe taxes in your resident state.

So maybe the specific set of states you've worked in are either "no income tax" states or have reciprocity in place with your resident state? Or maybe your employer is not doing things quite right?

Either way, for practical purposes, filing based on the documents your employer sent you is probably fine, particularly if you're not making boatloads of money in a bunch of different states - are they really going to go through the effort to chase you down if you owe $200? Probably not. How would they even find this out? Juice is typically not worth the squeeze if your employer is not reporting income to a state, even if they should. Doesn't mean the rules aren't there, but if they are impractical to enforce, do they really matter?

Major league athletes have a problem flying under the radar on this - their salaries are often publicly known or can be estimated pretty easily. Then you play a game in a stadium that holds 20,000 to 80,000 and is advertised widely, so it is easy for the taxing authorities to know if they owe some income tax to a given state or locality, and for some it is a substantial amount.

There has been legislation proposed at the federal level that would establish a nation-wide "you don't have to file in a non-resident state unless you work 30 days in that state during the year" rule, but as far as I know, it hasn't been made law yet.

[Cordivae]

dandarc, this pretty much lines up with what I had read.  Where I'm having trouble is calculating how much 'income' I earned in California and how to adjust / report this correctly.

I've reached out to my HR for guidance... I know this isn't a unique problem.  They had us all fill out a form with how many days we were in NYC / Cali for Tax purposes, and I assume it was used to calculate those State Taxes / Income.  It just seems off, if I were to report only $14 of income in the state.  Some back of the napkin math should be around ~2kish, unless they were able to deduct business expenses.

[SeattleCPA]

Major league athletes have a problem flying under the radar on this - their salaries are often publicly known or can be estimated pretty easily. Then you play a game in a stadium that holds 20,000 to 80,000 and is advertised widely, so it is easy for the taxing authorities to know if they owe some income tax to a given state or locality, and for some it is a substantial amount.

Someone doesn't even need to make that much.

If you're a comedian or musician earning a few hundred bucks a night, you owe taxes to each and every state where you perform.

I remember a client who'd gone to a midwest state and to be a good person gave a speech. The honorarium was like $500. The state, the city, and the county were all over the person for their cut.

Who better to squeeze than a nonresident who doesn't vote...

[chuckster]

Haha yeah, my sister was an assistant to an assistant on a college sports team and had to file like 15 tax returns, one for each away game, after spending just a weekend in each state.

[Righty]

This is very common in the management consulting industry. Rule of thumb is expect to pay taxes to any state where you spend >10 "predominant days." As others mentioned, in some states its much fewer than that. I typically have to file in 4-5 states every year.