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:

  • Promoter
  • Rental property manager
  • Partnership or LLC
  • Estate or trust
  • Venue

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:

  • Actors
  • Athletes
  • Singers

How to avoid penalties

If you do not withhold, you may have to pay the amount you should have withheld, plus penalties and interest.

Check to see if you must withhold

If you have a withholding requirement

Every quarter you make nonwage payments you must:

Every year, send the payee a statement (Form 592-B).

You’ll be notified if a waiver or reduction is approved.

If you qualify, you can send us your completed statement using our secure web internet file transfer, and pay through electronic funds transfer. If not, you need to: