California Form 590 Draft - Withholding Exemption Certificate - 2015 Page 3

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2015 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 information on
publication, see Additional Information.
Foreign refers to non-U.S.
California backup withholding, go to ftb.ca.gov
C Who Certifies this Form
and search for backup 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 agent
FTB Pub. 1032, Tax Information for Military
information, go to edd.ca.gov or call
before payment is made. The withholding agent
Personnel.
888.745.3886.
is then relieved of the withholding requirements
Permanent Place of Business:
Do not use Form 590 to certify an exemption
if the agent relies in good faith on a completed
A corporation has a permanent place of
from withholding if you are a Seller of
and signed Form 590 unless notified by the
business in California if it is organized and
California real estate. Sellers of California
Franchise Tax Board (FTB) that the form should
existing under the laws of California or if it
real estate use Form 593-C, Real Estate
not be relied upon.
is a foreign corporation qualified to transact
Withholding Certificate, to claim an exemption
An incomplete certificate is invalid and the
intrastate business by the CA SOS. A
from real estate withholding.
withholding agent should not accept it. If the
corporation that has not qualified to transact
The following are excluded from withholding
withholding agent receives an incomplete
intrastate business (e.g., a corporation
and completing this form:
certificate, the withholding agent is required to
engaged exclusively in interstate commerce)
withhold tax on payments made to the payee
• The United States and any of its agencies or
will be considered as having a permanent place
until a valid certificate is received. In lieu of a
instrumentalities.
of business in California only if it maintains
completed certificate on the preprinted form, the
• A state, a possession of the United States,
a permanent office in California that is
withholding agent may accept as a substitute
the District of Columbia, or any of its
permanently staffed by its employees.
certificate a letter from the payee explaining
political subdivisions or instrumentalities.
why the payee is not subject to withholding. The
• A foreign government or any of its political
E Military Spouse Residency
letter must contain all the information required
subdivisions, agencies, or instrumentalities.
Relief Act (MSRRA)
on the 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
For example, if an entertainer (or the
a residence or domicile in any state solely
California.
entertainer’s business entity) is paid for a
by reason of being absent to be with the
performance, the entertainer’s information
Withholding is required on the following, but is
servicemember serving in compliance with
must be provided. Do not submit the
not limited to:
military orders.
entertainer’s agent or 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
made to foreign partners and members.
• Where you maintain a true, fixed, and
is required. Resident grantors can check
• Payments to nonresidents for rents if the
permanent home.
the 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 2014 Page 1

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