The Lowdown on California Form 592

First off, if you don't work in California, you have probably never seen this form.  To be more precise, if you didn't work in California in 2013, you have nothing to worry about.  However, for those folks who live outside California but performed more than $1500 worth of services in the state, California will withhold about 7% in taxes from you for that money on Form 592.


Why is this a big enough deal to write an entire article about?  Well, it affects a lot more people than you would think:  California has the largest economy of any state in America, and it is, in fact, the seventh largest in the world.  That means that a lot of people fly in and out of California to do business and perform services, especially as the tech boom continues to expand at its current, hyperactive clip.  Honorariums, such as guest speakers or lecturers, people providing official services, including travel for sports teams for California's many colleges, musicians, artists and writers who tour some of the nation's most populous cities, and especially independent contractors (no matter their industry) often find themselves traveling to the Golden State for intermittent work.
People from all over the 50 states are finding themselves with the need to deal with California state tax withholdings.  So if this happened to you, how are you supposed to report this on your federal return?
Luckily, as long as California withheld state taxes from your earnings on Schedule A, you will be able to claim an itemized deduction on your federal return.  Just be aware that if you claim that deduction, you will have to adjust your income next year to include the amount that California refunded to you (this counts as an overpayment.)

One caveat – the estimated taxes you pay California are not reportable as payments for your federal taxes!  You only need to report the federal tax withheld while you were working there.
Because Form 592 sits at the confluence of a lot of confusing state and federal tax laws and regulations, sometimes it makes sense to bring in a professional to handle it for you.  You can use software like that found at 1099Fire.com, or even outsource the entire process over to them to let them handle it for you.  If asking tax professionals to help you unwind the Gordian knot sounds like the right option for you, get in contact with 1099Fire.com any time by e-mail, or visit the website.  There, you can also find a great tax blog with answers to most of your questions.
Don't get frustrated by having to deal with the IRS and FTB!  There is help available.