Withholding

When you file your tax return, you can claim all types of withholding.

Wage withholding

Wage withholding is the prepayment of income tax.

We refer to the amount of wages taken from your paycheck for state and federal income taxes as withholding.

The amount of tax withheld is determined by the following.

  • The amount of income subject to tax
  • The number of allowances claimed on your Employee’s Withholding Allowance Certificate (IRS Form W-4 or EDD Form DE 4) submitted to your employer

Nonwage withholding (nonresident withholding)

You may need to prepay tax if you receive a non-wage payment, such as:

  • Trust distributions
  • Partnership and LLC distributions
  • Rents
  • Royalties
  • Gambling winnings

Your payer must take 7% from your CA income that exceeds $1,500 in a calendar year. This is called nonresident withholding.

Backup withholding (resident and nonresident withholding)

Backup withholding is a type of income tax withheld on specific income types when a payee fails to:

  • Provide the payer a correct taxpayer identification number (TIN)
  • Certify exemption from backup withholding

Your payer must take 7% from your California income.

Backup withholding: