I work in Illinois and live in Illinois but my company is in CA. What do I need to do for taxes?
I am a consultant working for a company that exists in California. The client is in illinois and I also live in Illinois. My W-2 from my company shows California as the state taking taxes. How do I prepare my tax return? Do i need to report taxes to California?
Is it a temporary assignment for a set period of one year or less? In other words do you have a residence in CA and are your living expenses in IL deductible. See http://www.irs.gov/publications/p463/ch01.html#en_US_publink100033764
If you live and work in IL for an indefinite period of time (or over a year), you should tell your employer to withhold IL tax. IL Dept of Revenue http://www.revenue.state.il.us/
If it is too late for your employer to correct your W-2 you would need to file non-resident in CA to get your CA withholding back (hope you don’t get an IOU) http://www.ftb.ca.gov/forms/2008/index.shtml
Which forms you file for each state depend whether you lived in IL the entire year or moved here during the year.
March 1st, 2010 at 6:04 pm
CA taxes should never have been withheld from your wages, only IL taxes. Your state of residence and where you work are what matter, NOT the employers location.
Contact your employer immediately and have this corrected! You should have done this with the first paycheck.
You now need to file a non-resident CA return showing $0 income and the CA taxes withheld. CA will refund that to you. Attach an explanatory letter to the CA return to expedite matters.
Next, file your IL return and pay the tax due. IL may assess an underpayment penalty since you didn’t have IL taxes withheld throughout the year. You can ask them to abate that but don’t hold your breath. They may also assess interest for underpayment; that generally cannot be abated.
References :
March 1st, 2010 at 6:47 pm
Is it a temporary assignment for a set period of one year or less? In other words do you have a residence in CA and are your living expenses in IL deductible. See http://www.irs.gov/publications/p463/ch01.html#en_US_publink100033764
If you live and work in IL for an indefinite period of time (or over a year), you should tell your employer to withhold IL tax. IL Dept of Revenue http://www.revenue.state.il.us/
If it is too late for your employer to correct your W-2 you would need to file non-resident in CA to get your CA withholding back (hope you don’t get an IOU) http://www.ftb.ca.gov/forms/2008/index.shtml
Which forms you file for each state depend whether you lived in IL the entire year or moved here during the year.
References :
I live/work in IL for a California company, and our other outside sales people pay state taxes where they live/work.