California 587 Form (2015) Nonresident Withholding Allocation Worksheet Page 2
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32015 Instructions for Form 587
Nonresident Withholding Allocation Worksheet
References in these instructions are to the California Revenue and Taxation Code (R&TC).
General Information
• The payee is a corporation, partnership,
Payments subject to withholding include
or limited liability company (LLC) that
the following:
Backup Withholding – With certain limited
has a permanent place of business in
• Payments for services performed in
exceptions, payers that are required to
California or is qualified to do business
California by nonresidents .
withhold and remit backup withholding
in California . Foreign corporations
• Payments made in connection with a
to the Internal Revenue Service (IRS)
must be qualified to transact intrastate
California performance .
are also required to withhold and remit
business . Use Form 590 .
• Rent paid to nonresidents if the rent is
to the Franchise Tax Board (FTB) on
• The payment is to an estate and the
paid in the course of the withholding
income sourced to California . The
decedent was a California resident . Use
agent’s business .
California backup withholding rate is 7%
Form 590 .
• Payments to nonresidents for royalties
of the payment . For California purposes,
Form 587 does not apply to payments for
from business activities sourced to
dividends, interests, and any financial
wages to employees . Wage withholding
California .
institution’s release of loan funds made in
is administered by the California
• Payments of prizes for contests
the normal course of business are exempt
Employment Development Department
entered in California .
from backup withholding . For additional
(EDD) . For more information, go to
• Distributions of California source
information on California backup
edd .ca .gov or call 888 .745 .3886 .
income to nonresident beneficiaries
withholding, go to ftb .ca .gov and search
from an estate or trust .
for backup withholding .
• Endorsement payments received for
B When to Complete
If a payee has backup withholding, the
services performed in California .
payee must contact the FTB to provide a
The withholding agent requests that the
• Other payments of California source
valid Taxpayer Identification Number (TIN)
nonresident payee completes, signs,
income made to nonresidents .
before filing a tax return . The following are
and returns Form 587 to the withholding
Payments not subject to withholding
acceptable TINs: social security number
agent when a contract is entered into
include payments:
(SSN); individual taxpayer identification
and before a payment is made to the
number (ITIN); federal employer
• To a resident of California or to a
payee . The withholding agent relies on
identification number (FEIN); California
corporation, LLC, or partnership, with
the certification made by the payee to
corporation number (CA Corp no .); or
a permanent place of business in
determine the amount of withholding
California Secretary of State (CA SOS)
California .
required, provided the completed and
file number . Failure to provide a valid
• To a corporation qualified to do
signed Form 587 is accepted in good faith .
TIN will result in the denial of the backup
business in California .
Form 587 remains valid for the duration
withholding credit .
• For sale of goods .
of the contract (or term of payments),
• For income from intangible personal
provided there is no material change in
A Purpose
property, such as interest and
the facts . By signing Form 587, the payee
dividends, unless the property has
agrees to promptly notify the withholding
Use Form 587, Nonresident Withholding
acquired a business situs in California .
agent of any changes in the facts .
Allocation Worksheet, to determine if
• For services performed outside
withholding is required, and the amount
The withholding agent retains Form 587
of California .
of California source income subject to
for a minimum of four years and must
• To a payee that is a tax-exempt
withholding .
provide it to the FTB upon request .
organization under either California or
Withholding is not required if payees are
federal law . Use Form 590 .
C Income Subject to
residents or have a permanent place of
• To a payee that is a government entity .
business in California . Get FTB Pub . 1017,
Withholding
• To reimburse a payee for expenses
Resident and Nonresident Withholding
relating to services performed in
California Revenue and Taxation Code
Guidelines, for more information .
California if the reimbursement is
(R&TC) Section 18662 and the related
separately accounted for and not
Do not use Form 587 if any of the
regulations require withholding of income
subject to federal Form 1099 reporting .
following apply:
or franchise tax on certain payments made
Corporate payees, for purposes
• You sold California real estate .
to nonresidents (including individuals,
of this exception, are treated as
Use Form 593-C, Real Estate
corporations, partnerships, LLCs, estates,
individual persons .
Withholding Certificate .
and trusts) for income received from
• The payee is a resident of California
California sources .
D Waivers/Reductions
or is a non-grantor trust that has
Withholding is required if total payments
at least one California resident
A nonresident payee may request that
of California source income to the
trustee . Use Form 590, Withholding
withholding be waived . To apply for
nonresident payee during the calendar
Exemption Certificate .
a withholding waiver, use Form 588,
year exceed $1,500 . The withholding rate
Nonresident Withholding Waiver Request .
is 7% unless the FTB grants a waiver .
A nonresident taxpayer has the option
See General Information D, Waivers/
to request a reduction in the amount to
Reductions .
be withheld . To apply for a withholding
Form 587 Instructions 2014 Page 1
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