Withholding on payments to nonresidents Nonresident withholding
You may need to withhold tax if you make nonwage payments. This is called nonresident withholding.
Payers who withhold tax on nonresidents are called withholding agents. Examples of withholding agents:
- Rental property manager
- Partnership or LLC
- Estate or trust
When you do not have to withhold
You may not have to withhold if:
- Total payments or distributions are $1,500 or less
- Paying for goods
- Paying for services performed outside of California
- See Publication 1017 for full list of exceptions
Otherwise you must withhold 7% of the nonwage payment that exceeds $1,500 in a calendar year.
When you have to withhold
Payments to nonresidents for services performed in California, like:
- Construction (independent contractors)
- Installation of software
- Public speaking
Payments made to nonresident entertainers for performing in California, like:
How to avoid penalties
If you do not withhold, you may have to pay the amount you should have withheld, plus penalties and interest.
If you have a withholding requirement
Every quarter you make nonwage payments you must:
- Calculate withholding 7% of nonwage payment above $1500
- Send us your Resident and Nonresident Withholding Statement (Form 592) with Payment Voucher for Resident and Nonresident Withholding (Form 592-V)
Every year, send the payee a statement (Form 592-B).
You’ll be notified if a waiver or reduction is approved.
- Send us your statement by mail
- Include payment and our payment voucher (Form 592-V)
- FTB Pub 923 Secure Web Internet File Transfer (SWIFT) Guide for Resident, Nonresident, and Real Estate Withholding
- 1023 validator information - Learn how to use the validator to check your file and make sure it meets the 1023 file format.