Group nonresident return with nonresident aliens March 2022 Tax News

Filing a group nonresident return with nonresident aliens

For taxable years beginning on or after January 1, 2021, and before January 1, 2026, Personal Income Tax Law and the Administration of Franchise and Income Tax Law, allows an entity authorized by the taxpayer to file a group nonresident return on behalf of electing nonresident aliens receiving California source income.

A nonresident alien, who is not eligible for, or has not been issued a federal Social Security Number (SSN) nor Individual Tax Identification Number (ITIN), can be included in the group nonresident return.

For a nonresident alien electing to be included in a group nonresident return, the tax rate or rates applicable to each nonresident’s taxable income for services performed in this state for that taxpayer would consist of the highest marginal rate or rates, plus, if applicable, the additional mental health tax, and no deductions or credits would be allowed. As the agent for the electing nonresident aliens, the entity would make all tax payments, additions to tax, interest, and penalties otherwise required to be paid by the electing nonresident alien.

The 2021 Schedule 1067A Nonresident Group Return Schedule has been updated to allow the taxpayer to list the nonresident aliens electing to be included in a group nonresident return that have neither a SSN nor ITIN. Payment for the total tax liability should be attached to a timely filed nonresident group return, along with any other applicable forms and schedules.

To include a nonresident alien who is not eligible for or has not been issued a federal SSN or ITIN in the group nonresident return:

• Complete the group nonresident return
• Complete and attach Schedule 1067A to the group nonresident return
• Attach the total tax liability payment at time of filing the group nonresident return
• Attach all other applicable forms and schedules to filing the group nonresident return

More information on how to complete the group nonresident return, and its other applicable forms and schedules, is provided in 2021 Publication 1067, Guidelines for Filing a Group Form 540-NR or the 2021 Schedule 1067A, Group Nonresident Return Schedule.

Additional information can also be found in the April 2021, AB 2660 Tax News article at AB 2660 estimated tax payment information | FTB.ca.gov.