California Form 590 Draft - Withholding Exemption Certificate

2016 Instructions for Form 590

Withholding Exemption Certificate

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

General Information

D Definitions

• Payments to nonresidents for royalties from

activities sourced to California.

Registered Domestic Partners (RDP) – For

For California non-wage withholding purposes,

• Distributions of California source income to

purposes of California income tax, references

nonresident includes all of the following:

nonresident beneficiaries from an estate or

to a spouse, husband, or wife also refer to a

• Individuals who are not residents of

trust.

Registered Domestic Partner (RDP) unless

California.

• Endorsement payments received for services

otherwise specified. For more information on

• Corporations not qualified through the

performed in California.

RDPs, get FTB Pub. 737, Tax Information for

California Secretary of State (CA SOS)

• Prizes and winnings received by

Registered Domestic Partners.

to do business in California or having no

nonresidents for contests in California.

permanent place of business in California.

However, withholding is optional if the total

A Purpose

• Partnerships or limited liability companies

payments of California source income are

(LLCs) with no permanent place of business

Use Form 590, Withholding Exemption

$1,500 or less during the calendar year.

in California.

Certificate, to certify an exemption from

For more information on withholding get

• Any trust without a resident grantor,

nonresident withholding.

FTB Pub. 1017, Resident and Nonresident

beneficiary, or trustee, or estates where the

Form 590 does not apply to payments of

Withholding Guidelines. To get a withholding

decedent was not a California resident.

backup withholding. For more information,

publication, see Additional Information.

Foreign refers to non-U.S.

go to ftb.ca.gov and search for backup

C Who Certifies this Form

withholding.

For more information about determining

resident status, get FTB Pub. 1031,

Form 590 does not apply to payments for

Form 590 is certified by the payee. California

Guidelines for Determining Resident Status.

wages to employees. Wage withholding is

residents or entities exempt from the

Military servicemembers have special rules

administered by the California Employment

withholding requirement should complete

for residency. For more information, get

Development Department (EDD). For more

Form 590 and submit it to the withholding

FTB Pub. 1032, Tax Information for Military

information, go to edd.ca.gov or call

agent before payment is made. The withholding

Personnel.

888.745.3886.

agent is then relieved of the withholding

Permanent Place of Business:

Do not use Form 590 to certify an exemption

requirements if the agent relies in good faith

A corporation has a permanent place of

from withholding if you are a Seller of

on a completed and signed Form 590 unless

business in California if it is organized and

California real estate. Sellers of California

notified by the Franchise Tax Board (FTB) that

existing under the laws of California or it has

real estate use Form 593-C, Real Estate

the form should not be relied upon.

qualified through the CA SOS to transact

Withholding Certificate, to claim an exemption

An incomplete certificate is invalid and the

intrastate business. A corporation that has

from the real estate withholding requirement.

withholding agent should not accept it. If the

not qualified to transact intrastate business

The following are excluded from withholding

withholding agent receives an incomplete

(e.g., a corporation engaged exclusively in

and completing this form:

certificate, the withholding agent is required

interstate commerce) will be considered as

to withhold tax on payments made to the

• The United States and any of its agencies or

having a permanent place of business in

payee until a valid certificate is received. In

instrumentalities.

California only if it maintains a permanent

lieu of a completed exemption certificate, the

• A state, a possession of the United States,

office in California that is permanently staffed

withholding agent may accept a letter from

the District of Columbia, or any of its

by its employees.

the payee as a substitute explaining why they

political subdivisions or instrumentalities.

are not subject to withholding. The letter must

• A foreign government or any of its political

E Military Spouse Residency

contain all the information required on the

subdivisions, agencies, or instrumentalities.

Relief Act (MSRRA)

certificate in similar language, including the

under penalty of perjury statement and the

B Income Subject to

Generally, for tax purposes you are considered

payee’s taxpayer identification number. The

to maintain your existing residence or domicile.

Withholding

withholding agent must retain a copy of the

If a military servicemember and nonmilitary

certificate or substitute for at least four years

California Revenue and Taxation Code (R&TC)

spouse have the same state of domicile, the

after the last payment to which the certificate

Section 18662 requires withholding of income

MSRRA provides:

applies, and provide it upon request to the FTB.

or franchise tax on payments of California

• A spouse shall not be deemed to have lost

source income made to nonresidents of

If an entertainer (or the entertainer’s business

a residence or domicile in any state solely

California.

entity) is paid for a performance, the

by reason of being absent to be with the

entertainer’s information must be provided.

Withholding is required on the following, but is

servicemember serving in compliance with

Do not submit the entertainer’s agent or

not limited to:

military orders.

promoter information.

• A spouse shall not be deemed to have

• Payments to nonresidents for services

The grantor of a grantor trust shall be treated

acquired a residence or domicile in any

rendered in California.

as the payee for withholding purposes.

other state solely by reason of being there

• Distributions of California source income

Therefore, if the payee is a grantor trust and

to be with the servicemember serving in

made to domestic nonresident partners,

one or more of the grantors is a nonresident,

compliance with military orders.

members, and S corporation shareholders

withholding is required. If all of the grantors

and allocations of California source income

Domicile is defined as the one place:

on the trust are residents, no withholding is

made to foreign partners and members.

• Where you maintain a true, fixed, and

required. Resident grantors can check the

• Payments to nonresidents for rents if the

permanent home.

box on Form 590 labeled “Individuals —

payments are made in the course of the

• To which you intend to return whenever you

Certification of Residency.”

withholding agent’s business.

are absent.

Form 590 Instructions 2015 Page 1

California Form 590 Draft - Withholding Exemption Certificate - 2016 Page 3

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