I have a question for the group. Its a payroll question about California income taxes. Anyone here an expert on CA withholding laws?!
Logan Watts: To clarify – I dont want to bother with the meat of the question unless someone has the general knowledge. If so, please respond and Ill post the exact question.
Kaia Hampton: Helena Gutierrez: is in CA. Do you know any payroll specialists?
Helena Gutierrez: yes tons on Seth David Between Wall & Main Group. I would pose question in there. Matthew Nunez:Stacey L Byrne C.P.A. are also expertos in CALI
Matthew Nunez: Thanks Helena Gutierrez:! Kathy, You can also join the Payroll for Preparers FB Group and youll find plenty of payroll experts for CA and most other states
Maryam Terry: post the question ?
Logan Watts: Ok, heres the question: a California software company is applying for a Fed grant with a requirement that 98% of its employees pay CA income taxes. The company is currently contracting Oregon developers. Is there any way to have those Oregon based developers pay CA income taxes instead? They live in Oregon. Im pretty sure the answer is no. Im told possibly CA has different laws regarding payroll taxes. Helena Gutierrez:, Matthew Nunez: …
Maryam Terry: are the employees working and living in CA?
Matthew Nunez: 1. I think that would be a pretty hard sell to have the OR developers paying CA income taxes 2. You said theyre â€œcontracting OR developersâ€: are they 1099 contractors or employees?
Logan Watts: They live in Oregon and could be on payroll with the company if it would make a difference, but are currently 1099.
Nicole Reyes: If they were contractors (Oregon) they would not be employees. Can they get to 98%? That is the question.
Nicole Reyes: Can they create a company with the Oregon employees and steer away from the California group?
Logan Watts: Nicole Reyes: not with their current mix. Thats the whole issue. The Oregon group is big.
Logan Watts: So the Oregon folks cannot simply elect to pay CA income tax instead of OR?
Nicole Reyes: Do they earn any money in California?
Logan Watts: Nicole Reyes: no. If they did, would it matter? Really wanting to figure out how to set this up.
Logan Watts: I just got a little clarification on the scnario: The Oregon company would set up a California company with a couple employees residing in Cal. Then the Cal Co would hire some Oregon residents as employees or independent contractors. Would the Oregon residents then pay Cal income tax?
Logan Watts: The Cal Co would receive all revenue from California.
Nicole Reyes: You pay state taxes in each state you work in. For example I do a few returns for Major League and minor league baseball players. Every state they earned money while playing a game they need to file a state return and also Canada.
Logan Watts: Nicole Reyes: – thank you. So, if the Cal Co pays the employee, but the employee resides in Oregon and works virtually, does that count as the employee â€œworking inâ€ CA or OR?
Nicole Reyes: The question is…where did they earn their money? working in Oregon means money earned in Oregon. Some W-2s I see have several states and income with different amounts in each state. If the Oregon residents earn 90% of their income in Oregon they will only be taxed in Oregon on the Money they earned in Oregon. The other 10% they earned in California they would do a state return for California with only the money they earned in California
Logan Watts: My confusion is about how to account for â€œvirtualâ€ workers. If an employee writes software for a company whose office is in CA, but he works mostly from his home office in OR, does that count as â€œworking inâ€ CA or â€œworking inâ€ OR?
Amari Stokes: Logan Watts: Working in OR.
Nicole Reyes: Amari Stokes: is right Logan Watts:
Lyla Hawkins: These Oregon people arent employees anyway, so does the company have any actual employees on payroll?
Logan Hunt: Lost cause. Oregon isnt going to let OR employees pay taxes as CA employees. Think about it this way. You want to ask Oregon employees to file CA tax returns even though they dont live or work in CA. Impossible. Besides, what they are proposing is committing FRAUD on a Federal grant that obviously is written to cover CA workers.
Logan Watts: To be clear, no one is proposing committing fraud. They are trying to understand the laws regarding CA withholding bc it was implied that there is reciprocity between OR and CA. Trying to get clarity on that by someone who might know. I assumed this…See more
Logan Hunt: Logan Watts:. Kathy, just because I mentioned that it would be a fraudulent action does not mean Im being judgmental. Not at all. Why would you care if I judged them? Im a stranger on the Internet simply stating a clear fact. They ARE pr…See more
Logan Watts: Again, to be clear, no one is trying to circumvent. Anyone can apply for the grant. There are points assigned for various things. A certain amount of points is awarded if the company hits the 98%. Its not a disqualifier.