CA--Independent Contractor Federally/CA Employee

[peggysioux5]

CA states:

If you are classified as an independent contractor at the federal level but classified as an employee for California, you may have received different types of income reporting forms for federal and California purposes.

If an individual falls into that category, does the "employer/payee" complete the W2 showing wages for CA only being a 1099 is being filed federally?  Do wages only show in the state portion of the W-2?

[Lee B]

I have been an accountant for 45 years and I have never seen this happen and if I was involved to the point where I had some input

I wouldn't let it happen.   This situation is such a tangled mess I would walk away.

[Slippery Pencil]

3 hours ago, peggysioux5 said:

Do wages only show in the state portion of the W-2?

They're not federal wages so they definitely don't go into the federal wages box.

[BulldogTom]

We saw this addressed in our CA update class, but I did not pay that close of attention because I don't have anyone in that situation.   

Federal is computed like a contractor.   For CA, you make the adjustments on the CA 540CA.   Add the whole 1099 amount to wages, subtract the net Sch C income.   Adjust the Sch A Itemized deductions (CA allows Unreimbursed employee expenses as a Itemized deduction).   Watch for Self Employed Health Insurance - it goes to Medical Expenses in CA.

Tom
Longview, TX