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Decision Charts for Those Who Pay California Source Income to Nonresidents

Decision charts

If you pay California source income to nonresidents of California, you must withhold and send us 7 percent of all payments that exceed $1,500 in a calendar year. (Revenue and Taxation Code Section 18662)

Use the charts below to determine if or how much you are required to withhold. For complete details, please see the applicable forms and instructions found on our withholding forms and publications page.

No withholding required

If you pay…

And…

Then…

  • A corporation
  • An LLC
  • A partnership

Either of the following is true:

  • The payee should complete Form 590, Withholding Exemption Certificate, and give it to the withholding agent.
  • No withholding required with a valid Form 590.

An individual

The payee is a California resident.

  • The payee should complete Form 590, Withholding Exemption Certificate, and give it to the withholding agent.
  • No withholding required with a valid Form 590.

A tax-exempt entity

The payee is exempt from tax under federal law.

  • The payee should complete Form 590, Withholding Exemption Certificate, and give it to the withholding agent.
  • No withholding required with a valid Form 590.

Withholding required

If you pay…

And…

Then…

  • A corporation
  • An LLC
  • A partnership

Both of the following are true:

  • It is not qualified with the California Secretary of State to do business in California.
  • It does not maintain a permanent place of business in California.
  • Withhold 7 percent from all California source income payments that exceed $1,500 in a calendar year unless you receive other information from us.
  • Send payments to us with completed Forms 592, Resident and Nonresident Withholding Statement, and 592-V, Payment Voucher for Resident and Nonresident Withholding. See Form 592 for payment due dates.
  • Before January 31 following the close of the calendar year, provide the payee with a printed or electronic Form 592-B statement showing the total amount of income subject to withholding and the total amount withheld. You may use Form 592-B, Resident and Nonresident Withholding Tax Statement, for this purpose. See Form 592-B instructions for more details.
  • Keep copies for your records.

An individual

The payee is not a resident of California.

  • Withhold 7 percent from all California source income payments that exceed $1,500 in a calendar year unless you receive other information from us.
  • Send payments to us with completed Forms 592, Resident and Nonresident Withholding Statement, and 592-V, Payment Voucher for Resident and Nonresident Withholding. See Form 592 for payment due dates.
  • Before January 31 following the close of the calendar year, provide the payee with a printed or electronic Form 592-B statement showing the total amount of income subject to withholding and the total amount withheld. You may use Form 592-B, Resident and Nonresident Withholding Tax Statement, for this purpose. See Form 592-B instructions for more details.
  • Keep copies for your records.

Waived withholding

If you pay…

And…

Then…

  • A corporation
  • An LLC
  • A partnership
  • An individual

Both of the following are true:

  • The payee or you submit to us Form 588, Nonresident Withholding Waiver Request, allowing us at least 21 business days before you make the California source income payment.
  • The payee and you receive a waiver approval letter from us.

No withholding required with a waiver approval letter from us.

Reduced withholding

If you pay…

And…

Then…

  • A corporation
  • An LLC
  • A partnership
  • An individual

Both of the following are true:

  • The payee submits to us a paper or electronic Form 589, Nonresident Reduced Withholding Request, before you make the California source income payment.
  • We send you a Request for Reduced Withholding - Approval letter.
  • Withhold the amount per the letter from us.
  • Send payments to us with completed Forms 592, Resident and Nonresident Withholding Statement, and 592-V, Payment Voucher for Resident and Nonresident Withholding. See Form 592 for payment due dates.
  • Before January 31 following the close of the calendar year, provide the payee with a printed or electronic Form 592-B statement showing the total amount of income subject to withholding and the total amount withheld. You may use Form 592-B, Resident and Nonresident Withholding Tax Statement, for this purpose. See Form 592-B instructions for more details.
  • Keep copies for your records.