Nonresidents are subject to California state income tax on their income from California sources. Part-year residents are subject to California state tax on all their income from all sources during the part of the year they are California residents, and on income from California sources during the part of the year they are nonresidents.
According to the California Franchise Tax Board, you are considered a resident of California if you are present in California for other than a temporary or transitory purpose, or you are domiciled in California but located outside California for a temporary or transitory purpose. Domicile for tax purposes is the place where you establish yourself and your family with the intention of making it your permanent home and where you intend to return whenever you are absent. FTB Publication 1031, Guidelines for Determining Resident Status provides more information.
If you are married and file a joint federal return and one spouse is a nonresident of California and had no California source income for the year, you can file separate California state returns. But if one spouse has California source income and resides in a community property state, the community income is split equally between the spouses and both would have California source income.
California source income includes salaries and wages for services performed in California. The California Franchise Tax Board points out that if you are a nonresident, California does not tax retirement income attributable to services you performed in California after December 31, 1995. And IRA distributions received by a nonresident of California are not taxed in California.
Income from a trade, business or profession carried on in California is subject to California state income tax. If you operated your trade, business or profession both inside and outside California, you would have to allocate your income by filing Schedule R, Apportionment and Allocation of Income.
Nonresidents are subject to California tax on rental and royalty income from property located in California and income from a farming activity conducted in California. Gains or losses on the sale of real property located in California are subject to California state income tax. Gains or losses on the sale of stocks and bonds are sourced where you are a resident at the time of the sale. So nonresidents would not be subject to California tax on those gains or losses.
Partners in a partnership or limited liability company (LLC), and shareholders in an S corporation would be subject to California tax on income from California sources.
Nonresidents are subject to California tax on interest and dividends only if they are from an account or security that was used in a trade or business located in California.
Military pay received by members of the service stationed in California who are not domiciled in California is not subject to California state income tax. And a non-military spouse who is a not a resident of California and is in California only to be with the spouse who is a military service member stationed in California is not subject to California state tax on income for services performed in California. Nonresidents of California are not taxed in California for military retirement pay.
Compensation received by airline flight personnel would not be taxable in California for nonresidents if less than 50% of flight time is in California. Interstate railroad employees and truck drivers whose regularly assigned duties are performed in two or more states are subject to tax in their state of residence. Merchant seamen who are in California only because it is a port-of-call and do not maintain other contact or connections with the state would be considered nonresidents.
According to the California Franchise Tax Board, income earned by individuals from foreign countries in California may be exempt from federal income tax under a tax treaty. But that income would be subject to California state tax unless the treaty specifically exempts it from state tax.
If you are a nonresident and have income from California sources, you would have to file a California state tax return if you meet the filing requirements. These requirements are based on your filing status, age, and number of dependents, and on your gross income from all sources and your California adjusted gross income, which is your federal adjusted gross income from all sources, increased or decreased by California income adjustments. You can find a table with the filing requirements on the California Franchise Tax Board website under Do I need to file?
If you are a nonresident or part-year resident of California and are required to file, you must use either the Short Form 540NR or the Long Form 540NR. You can find a table showing the guidelines for each form on the California Franchise Tax Board website by searching Which Form Should I File and the tax year, or in the California 540NR Nonresident or Part-Year Resident Booklet.
California 540NR Nonresident or Part-Year Resident Booklet, California Franchise Tax Board
Do I need to file? California Franchise Tax Board
FTB Publication 1031, Guidelines for Determining Resident Status, California Franchise Tax Board
FTB Publication 1032, Tax Information for Military Personnel
Long Form 540NR, California Nonresident or Part-Year Resident Income Tax Return
Nonresidents and Part-Year Residents, California Franchise Tax Board
Schedule R, Apportionment and Allocation of Income
Short Form 540NR, California Nonresident or Part-Year Resident Income Tax Return