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Franchise Tax Board

Decision Charts for Those Who Pay California Source Income to Nonresidents

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. (R&TC Section 18662)

Use the charts below to determine if or how much you are required to withhold. For complete details, please see the applicable FTB forms and instructions.

No Withholding Required

If you pay…

And…

Then…

  • A corporation
  • An LLC
  • A partnership

Either of the following is true:

An individual

The payee is a California resident.

A tax-exempt entity

The payee is exempt from tax under federal law.

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.

An individual

The payee is not a resident of California.

Waived Withholding

If you pay…

And…

Then…

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

Both of the following are true:

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 FTB Form 589, Nonresident Reduced Withholding Request, allowing us at least 10 business days before you make the California source income payment.
  • We send you a Request for Reduced Withholding - Approval letter.