california: I worked 7 months in California as a contractor. My employer is in Massachusetts but the client is in California. Based on the non-resident income tax form, only California source income is subject to income tax. I think my income is not based in California. Am I correct? My employer withheld CA income tax.|||In California, Wages and Salaries have a source where the service is performed. The location of the employer does not affect the source. So if the work was done in California, it's subject to California Income Tax. See page 4, http://www.ftb.ca.gov/forms/06_forms/06_鈥?/a> See Form 587 http://www.ftb.ca.gov/forms/07_forms/07_鈥?/a> Your company is required to withhold taxes from your paycheck if services are performed in California over $1,500, unless they have applied for and been granted a waiver from the Franchise Tax Board. As a nonresident, you are taxed only on your income from California sources, including your income for services performed in California. California allows a credit for taxes paid on income in another state, but being a resident of Texas, this wouldn't apply to you since Texas does not assess income tax. "Wages and Salaries Wages and salaries have a source where the services are performed. Neither the location of the employer, where the payment is issued, nor your location when you receive payment affect the source of this income. A resident must include on Schedule CA (540NR), column E or Short Form 540NR, line 21 all wages and salaries earned, regardless of where the services were performed. A nonresident must include the income for services performed in California. Example 1 鈥?You are a resident of New York working temporarily in California for a New York corporation. Determination: Your income earned for services performed in California has a California source. As a nonresident, you must include this California source income on Schedule CA (540NR), column E or Short Form 540NR, line 21." Individuals working or performing services within California are subject to CA income tax, even if their company does not withhold taxes from their pay. Individuals traveling on business trips are still subject to CA income tax rules if they are paid for services performed in CA during their temporary stay. If their income exceeds the minimum amount required for their filing status, they are expected to file a return and pay the tax due. Don't feel bad about being subject to another state's income tax. A professional athlete who plays in many states, files a return in each of those states assessing income tax.|||I'm not sure, but H&R Block will answer any basic questions for free.... just give them a call!|||You worked in CA - sounds like CA source income.|||Your income is earned in the state you WORK in. In this case, you worked in California, so your employer withheld the correct taxes. You will need to file a CA non-resident tax form to recoup your taxes paid.