California group nonresident tax return Composite tax return

Overview

A group nonresident tax return is a single tax return that is for a group of individuals, also known as a composite tax return, that meets the California individual income tax return filing requirement.

The business files the group nonresident return on behalf of its qualified nonresident individuals to report their loss or pay tax on their share of state income.

A group nonresident return may be filed by:

• S corporations
• Partnerships
• Limited liability companies (LLCs)
• C corporations on behalf of its nonresident directors

Visit Guidelines for Filing a Group Form 540NR (FTB Pub 1067) for more information.

Who is a qualified nonresident individual

To be considered a qualified nonresident individual, you must meet all the following:

• Be an individual or a grantor trust
• Be a full-year nonresident of California
• Your income or loss from the business is your only California source income or loss, unless the other California source income or loss is being reported on another group nonresident return

Election to file a group nonresident return

The business must make an annual election to file a group nonresident return. Once made, the election is irrevocable for the tax year. The business makes the election by attaching a completed and signed Group Nonresident Return Election (FTB 3864) with the group nonresident return.

The FTB 3864 is located in FTB Pub 1067.

Filing requirement

On the group nonresident return, only the California source income or loss from the business is reported. Individuals included in a California Group Nonresident Return are taxed at the highest marginal personal income tax rate for single taxpayers on California sourced income.

What form to file

The business uses California Nonresident or Part-Year Resident Income Tax Return (Form 540NR) for the group nonresident return.

When to file

A group nonresident return is required to file using Personal due dates.

The group nonresident return must be filed and any estimated payments must be paid on a calendar year basis. A fiscal year end is not allowed, even if the business has a fiscal year end.

Electronic payments

The business is required to make payments electronically either:

• Once you make an estimate or extension payment exceeding $20,000 or
• You file an original return with a tax liability over $80,000

Pay by bank account (Web Pay) to make group nonresident return estimated tax payments.

Visit Help with bank account (Web Pay) payments for detailed payment instructions.