Need some help fam - I live in Colorado, but have a job "based in San Francisco" so working remote. I'm paying Cali state taxes/ deductions. Will I get the excess back when I do my tax return for 2022? Will I get penalized in Colorado?

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Depending on what your job is and CA rules you may be paying tax in CA but if you do you will file a non resident CA return and a resident CO return. You will get a credit for taxes paid to other jurisdictions in CO.

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It does not net out EY. It’s a small credit you’ll get back on your 1040. Depends what other activity you have going on that could be subjected to more Colorado tax. Say you pay $2000 in CA tax, you’ll get a credit for 2k. But if you sold and have cap gains of $100k from your investments or you under withheld on your W2 wages you would still owe tax on that for Colorado purposes. Send me a message if you need help.

1) if you physically work in CO, your employer shouldn't be withholding CA taxes.

2) the CA tax rate is significantly higher than the CO rate. Your credit for taxes paid to CA will fully offset your CO liability with respect to your wage earnings. This means you are paying more (likely significant) by being coded to California over being coded to Colorado.

3) you can't simply file a CA return and claim that all wages are CO source income. If your employer withheld CA taxes, CA will treat all of this as taxes from CA source income. cA will force the employer to amend payroll returns for you to properly claim that you don't have CA source wages.

If your employer got this wrong, then they are also probably calculating their SF business tax/gross receipts tax incorrectly as well.

Feel free to prove me wrong. I will happily apologize if I am wrong. I suggest you review r&tc section 17951 and the corresponding regulations as well as regulation 17951-4, which you will find doesn't apply to employees.

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