CA-590 and CA-587 Tax Forms

CA-590 and CA-587 Tax Forms

The State of California Franchise Tax Board website has information regarding this withholding requirement.

California Revenue and Taxation Code (R&TC) Section 18662 and the related regulations requires withholding 7% of income or franchise tax on certain payments made to nonresidents (including individuals, corporations, partnerships, LLCs, estates, and trusts) for income received from California sources unless an approved waiver or reduction is granted. The withholding rate is 7% unless a waiver or reduction is granted by the FTB.

Payments to non-residents for services performed in CA including rent, royalties, prizes, and other winnings, and non-employee compensation are subject to withholding. When setting up a new vendor that will provide services in the state one of these two forms need to be collected:

  • Form 587: Non-Resident Withholding Allocation Worksheet –  This is to be completed by non-residents and based on their responses in the Payment Type section, withholding may not be required, or they may be directed to complete the allocation worksheet to adjust the withholding amount.

  • Form 590:  Withholding Exemption Certificate -  This form is to be completed by CA Residents or Non-Residents for which one of the exemption reasons apply based on entity type and/or resident status.

Info
Please consult a tax professional if you are unsure which form is most appropriate for you or your entity to complete. FMS Pay does not offer tax or legal advice.

The "Withholding Agent" field for the tax form submitted should be listed as "FMS PAY LLC."

Form 587, Nonresident Withholding Allocation Worksheet, and Form 590, Withholding Exemption Certificate, and accompanying instructions are provided for your convenience.

If you do not provide us a completed Form 587 or Form 590, we will withhold 7% of all payments made to you and remit withheld amounts to the California Franchise Tax Board. If you provide us Form 587, we will withhold 7% of the total payments subject to withholding within California.

    • Related Articles

    • Service Provider / Vendor Intake

      Welcome to FMS Pay! Thank you for your interest in becoming a service provider (aka Vendor) in California's Self-Determination Program! Before you start, please be sure to review the Medicaid waiver requirements and ensure you possess necessary ...

    • SDP Background Checks - "Direct Care Services"

      Background checks are an important safety measure for participants in the Self-Determination Program because people with developmental disabilities are more likely to be abused than people without disabilities. ...

    • VENDOR QUALIFICATIONS

      Overview: Vendor qualifications are a critical element of the Self-Determination Program. Medicaid Waiver requires that the FMS verify that all vendors have a valid business license and are qualified to provide the services they render in the ...

    • IRS W-9 Tips

      W9 INSTRUCTIONAL VIDEO: https://www.youtube.com/watch?v=Koedf42XQKI IRS W9 Website: https://www.irs.gov/forms-pubs/about-form-w-9 Below are some TIPS that might be helpful in filling out your W-9 and should not be taken as tax advice. If you have tax ...

    • SELF-DETERMINATION PROGRAM: HOME AND COMMUNITY-BASED SERVICES SETTING ASSESSMENT (HCBS)

      The federal Home and Community-Based Services (HCBS) Final Rule requires individuals who receive services be provided full access to the benefits of community living and that services be offered in settings that are integrated in the community. Only ...