California Withholding laws & HR compliance analysis

California Withholding: What you need to know

All California employers are required to deduct the amount of personal income tax (PIT) reasonably estimated to be due from wages of both resident and nonresident employees.
Employer. An employer is a person or legal entity that hires one or more persons to work for a wage, a salary, or other compensation. Employers include sole proprietors, partnerships, corporations, nonprofit and charitable organizations, limited liability companies, limited liability partnerships, public entities (including state and federal agencies), schools, associations and trusts, estates, joint ventures, and Indian tribes.
Employee. An employee includes any officer of a corporation; any worker who is an employee under the usual common-law rules; and any worker whose services are specifically covered by law. An employee may perform services on a temporary or less-than-full-time basis. The law does not exclude services from employment that are commonly referred to as day labor, part-time help, casual labor, temporary help, probationary, or outside labor.
Withholding may be based on either:
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• Wage bracket withholding tables provided by the Employment Development Department (EDD); or
• The exact calculation method.
State employers become subject to state employment taxes once they have paid more than $100 in wages taxable in California in a calendar quarter.
Withholding applies to wages of residents, regardless of where earned, and wages of nonresidents for income earned in California. Generally, employees who are subject to federal income tax withholding are also subject to PIT withholding. Agricultural, domestic, and most other employees who are exempt from federal withholding are also exempt from state ...

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