AdSense & State taxes

Where are state taxes owed for AdSense income?

[Tiger98]

I have a question regarding AdSense income and state taxes.

Let's say you live in a state other than California and are running AdSense as an individual. Is AdSense income considered to be a California source of income? Does this mean that you will have to pay CA state tax on all AdSense income?

Would the situation change at all if you were running AdSense through an S-corp or an LLC incorporated and located in another state?

Has anyone actually consulted with an accountant or tax attorney on this question?

Thanks.

[fezziwig]

CA isn't due any income taxes, to the best of my limited knowledge. We're not employees. We get 1099s, not W2s.

[Tiger98]

I don't think employee status has anything to do with it.

From California form 540NR instruction book, page 9 (bolding mine):

"If you were a nonresident of California and received income in 2003 that had its source in California or if you moved into or out of California in 2003, you must file either the Long or Short Form 504NR, California Nonresident or Part-Year Resident Income Tax Return. California taxes all income you received while you were a resident of California and the income you received from California sources while a nonresident."

Source: [ftb.ca.gov...]

The question is: is income from Google considered to be from "a California source."

[newbies]

CA isn't due any income taxes, to the best of my limited knowledge. We're not employees. We get 1099s, not W2s

Do you mean for 1099s, we don't need to pay CA tax? I always did before.

[ControlEngineer]

Check with a tax professional. From my experience, in general state taxes are owed in 1099 income, and the state may receive the 1099 information. 1099's are also used to report dividend and interest income; are these taxable in CA. Most likely, your Google income, and similar income, is taxable as income, just not on the same line as wages. But check with a tax preparer (CPA, lawyer, H&R Block, whoever does this for a living).

[fezziwig]

Say I live in a state other than California. Google pays me on a 1099. Why would I have to pay ANY tax to California. No way, (San) Jose. Arnold himself would have to show up at my door and I still wouldn't answer it.

I'll pay fed taxes and I'll pay my local & home state taxes. That's it.

[ControlEngineer]

[Arnold himself would have to show up at my door and I still wouldn't answer it.]

What if he brought his wife? ;}

You normally pay the taxes on your internet income, just like dividends from stocks and interest from banks (where ever they are located) in your state of residence (address to which your checks are mailed).

But check with a professional.

[rainmakerpsi]

this is very intresting. I would think that Google would say something about this if it was an issue. I'm sure they use 1099 for other things than just Adsense.

[fezziwig]

Okay, so if Maria came to the door, instead of Arnold, it would be a different proposition, altogether.

[varya]

I'm not a tax expert or an attorney, but I think this is a non-issue.

Check out the California state tax site. Non-residents only pay California tax in a limited set of circumstances, none of which apply to Adsense.

[ControlEngineer]

Okay, so if Maria came to the door, instead of Arnold, it would be a different proposition, altogether.

I would much prefer Mrs. Terminator to come by, but since I don't live in CA I still would pay any taxes.