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Instructions for Form 590

Withholding Exemption Certificate

References in these instructions are to the California Revenue and Taxation Code (R&TC).

General Information

• Distributions of California source income to

withholding agent may accept as a substitute

nonresident beneficiaries from an estate or

certificate a letter from the payee explaining

For purposes of California income tax,

trust.

why the payee is not subject to withholding. The

references to a spouse, husband, or wife

• Prizes and winnings received by

letter must contain all the information required

also refer to a Registered Domestic Partner

nonresidents for contests in California.

on the certificate in similar language, including

(RDP) unless otherwise specified. For more

the under penalty of perjury statement and the

However, withholding is optional if the total

information on RDPs, get FTB Pub. 737, Tax

payee’s taxpayer identification number. The

payments of California source income are

Information for Registered Domestic Partners.

withholding agent must retain a copy of the

$1,500 or less during the calendar year.

Private Mail Box (PMB) – Include the PMB

certificate or substitute for at least four years

For more information on withholding get

in the address field. Write “PMB” first, then

after the last payment to which the certificate

FTB Pub. 1017, Resident and Nonresident

the box number. Example: 111 Main Street

applies, and provide it upon request to the FTB.

Withholding Guidelines. To get a withholding

PMB 123.

For example, if an entertainer (or the

publication see General Information H,

Foreign Address – Enter the information in

entertainer’s business entity) is paid for a

Publications, Forms, and Additional

the following order: City, Country, Province/

performance, the entertainer’s information

Information.

Region, and Postal Code. Follow the country’s

must be provided. Do not submit the

Backup Withholding – Beginning on or

practice for entering the postal code. Do not

entertainer’s agent or promoter information.

after January 1, 2010, with certain limited

abbreviate the country’s name.

The grantor of a grantor trust shall be treated

exceptions, payers that are required to

as the payee for withholding purposes.

withhold and remit backup withholding to

A Purpose

Therefore, if the payee is a grantor trust and

the Internal Revenue Service (IRS) are also

one or more of the grantors is a nonresident,

Use Form 590, Withholding Exemption

required to withhold and remit to the FTB. The

withholding is required. If all of the grantors

Certificate, to certify an exemption from

California backup withholding rate is 7% of the

on the trust are residents, no withholding

nonresident withholding. California residents or

payment. For California purposes, dividends,

is required. Resident grantors can check

entities should complete and present Form 590

interests, and any financial institutions release

the box on Form 590 labeled “Individuals

to the withholding agent. The withholding agent

of loan funds made in the normal course of

— Certification of Residency.”

is then relieved of the withholding requirements

business are exempt from backup withholding.

if the agent relies in good faith on a completed

For additional information on California backup

D Who is a Resident

and signed Form 590 unless told by the

withholding, go to ftb.ca.gov and search for

Franchise Tax Board (FTB) that the form should

backup withholding.

A California resident is any individual who

not be relied upon.

If a payee has backup withholding, the payee

is in California for other than a temporary or

Important – This form cannot be used

must contact the FTB to provide a valid

transitory purpose or any individual domiciled

for exemption from wage and real estate

Taxpayer Identification Number (TIN) before

in California who is absent for a temporary or

withholding.

filing a tax return. The following are acceptable

transitory purpose.

TINs: social security number (SSN); individual

• If you are an employee, any wage

An individual domiciled in California who is

taxpayer identification number (ITIN); federal

withholding questions should be directed

absent from California for an uninterrupted

employer identification number (FEIN);

to the FTB General Information number,

period of at least 546 consecutive days under

California corporation number (CA Corp No.);

800.852.5711. Employers should call

an employment‑related contract is considered

or California Secretary of State (SOS) file

888.745.3886 or go to edd.ca.gov.

outside California for other than a temporary or

number. Failure to provide a valid TIN will

• Sellers of California real estate use

transitory purpose.

result in the denial of the backup withholding

Form 593‑C, Real Estate Withholding

An individual is still considered outside

credit. For more information go to ftb.ca.gov

Certificate, to claim an exemption from real

California for other than a temporary or

and search for backup withholding.

estate withholding.

transitory purpose if return visits to California do

Who is Excluded from Withholding – The

not total more than 45 days during any taxable

B Requirement

following are excluded from withholding and

year covered by an employment contract.

completing this form:

R&TC Section 18662 requires withholding

This provision does not apply if an individual

• The United States and any of its agencies or

of income or franchise tax on payments of

has income from stocks, bonds, notes, or

instrumentalities

California source income made to nonresidents

other intangible personal property in excess

• A state, a possession of the United States,

of California.

of $200,000 in any taxable year in which the

the District of Columbia, or any of its

employment‑related contract is in effect.

Withholding is required on the following, but is

political subdivisions or instrumentalities

not limited to:

A spouse/RDP absent from California for

• A foreign government or any of its political

an uninterrupted period of at least 546

• Payments to nonresidents for services

subdivisions, agencies, or instrumentalities

days to accompany a spouse/RDP under an

rendered in California.

employment‑related contract is considered

• Distributions of California source income

C Who Certifies this Form

outside of California for other than a temporary

made to domestic nonresident S corporation

Form 590 is certified by the payee. An

or transitory purpose.

shareholders, partners and members and

incomplete certificate is invalid and the

allocations of California source income made

Generally, an individual who comes to

withholding agent should not accept it. If the

to foreign partners and members.

California for a purpose which will extend over

withholding agent receives an incomplete

• Payments to nonresidents for rents if the

a long or indefinite period will be considered a

certificate, the withholding agent is required to

payments are made in the course of the

resident. However, an individual who comes to

withhold tax on payments made to the payee

withholding agent’s business.

perform a particular contract of short duration

until a valid certificate is received. In lieu of a

• Payments to nonresidents for royalties with

will be considered a nonresident.

completed certificate on the preprinted form, the

activities in California.

Form 590 Instructions 2012 Page 1

California Form 590 Draft - Withholding Exemption Certificate With Instructions - 2013 Page 3

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