CA assistance

[Possi]

My client who lives in VA got a job after college. The company is based in CA. She is a tour guide, so she picks people up all over the country and drives them all over the country.

Her first tour to the east coast started in CA after her initial training there. After that, she was picking up in other states, and traveling all over.

She always lived in VA and other than the initial training and first job, has not worked in CA.

Of course, the company based in CA has CA withholding, but I have other clients who never worked in CA, so we file CA Non Resident and get the withholding back.

I believe I would do the same thing for her. Am I correct? She does file VA resident taxes.

Edited February 15, 2017 by Possi
clairfication

[Lion EA]

She might owe in all the states she works in, just like an entertainer or athlete.  Her job location is each tour.  Not sure where that makes her tax home.

[Possi]

Her tax home is in VA. That much I know. Her W2 is generated in CA and has CA withholding. This is very strange. I will do a CA NR return and a VA Res return.

Thanks~

[Lion EA]

I'm not convinced her tax home is VA.  Where does she do her work?  You said "other states."  Read up on tax home.  Her primary residence could be in VA.

[Possi]

I'm still trying to figure this out. If the company she works for in CA tells her to pick up clients in Boston and drive them to Arizona, that doesn't make her tax home in Boston. Right?

[Lion EA]

I don't know.  That's why I told you to read up on Tax Home.  She may be like an entertainer or athlete or over-the-road trucker and owe taxes to all states she works in -- MA and AZ and everything in between.  Her tax home isn't VA for that trip, maybe her residence.  Maybe an itinerant worker.

(Had a colleague who's client drove his truck all over, where ever he could find a load to carry and where ever he had to deliver.  They filed like 42 state returns most years.)  I had a consultant who traveled a lot, but his company withheld for the states they sent him to and prepared his W-2 correspondingly; we still filed a lot of state returns, but the company did the math and his work also took place in CT with the company.

Hopefully she kept a log if using per diem or receipts if using actual expenses or detailed expense accounts if being reimbursed by her company.  Those will help you with how much time spent in each state.  Some states have floors re how many days or how much income before filing is required; others, like AL, say you owe them tax if you put your foot or any body part over the border.  But, if she doesn't see clients in VA, I don't know if VA can be her tax home.

You might use an NATP question; they provide the cites and backup along with an answer.

Is her company big enough to have a legal department that researched this issue?  Did they give her any written information re her tax obligations to the states she picks up in, drops off in, passes through, as part of her training or her job offer letter?  Did they provide cites to the IRC that you can check on?

[Possi]

I just chatted with CA DOR. They told me to read the CA booklet. Wow. Got to love it.

I'm going to put this to bed real quick. Not sure I want anyone to know how...

LOL

[Lion EA]

CA's not a big issue this time.  She did actually work and train there, and they withheld.  So, you know you're filing a CA NR return with only a percentage of her income as CA-sourced income.  It's all those other states!

[Possi]

Riiiiight. I'm advising her to wear a disguise while driving....