Fill Your California 587 Form

The California Form 587, Nonresident Withholding Allocation Worksheet, is an essential document for determining withholding amounts on payments made to nonresidents. Several other forms and documents are often used in conjunction with Form 587 to ensure compliance with California tax regulations. Below is a list of these documents, along with brief descriptions of their purposes.

• Form 588: This form is used to request a waiver of withholding for nonresidents. If approved by the Franchise Tax Board (FTB), a copy of the determination letter must be attached to Form 587.
• Form 590: This form certifies that a payee is exempt from withholding. It is typically used when the payee is a resident or has a permanent place of business in California.
• Form 593-C: This form is the Real Estate Withholding Certificate. It is required when a nonresident sells California real estate, ensuring proper withholding on the proceeds of the sale.
• Form 589: This form allows domestic nonresidents to request a reduction in the standard withholding amount on California source payments, if applicable.
• Form 1131: The Privacy Notice form provides information about how personal information is collected and used by the FTB, ensuring transparency and compliance with privacy laws.

These forms work together to facilitate the correct withholding process and protect the rights of both payees and withholding agents. Understanding each document's role is crucial for compliance and efficient tax management.

• Misconception 1: The California 587 form is only for individuals.

This form is used by various entities, including corporations, partnerships, and LLCs. It's not limited to just individuals.

• Misconception 2: You need to file the form every time you make a payment.

You only need to submit Form 587 once per contract or payment agreement, unless there are significant changes in the information.

• Misconception 3: Withholding is always mandatory.

Withholding is only required if the total payments exceed $1,500 during the calendar year. For amounts below this threshold, withholding is optional.

• Misconception 4: The form is not necessary if the payee performs services outside California.

If a payee provides services both in and out of California, the form is still required to determine the amount subject to withholding.

• Misconception 5: All payments made to nonresidents require withholding.

Payments for goods or those made to entities with a permanent business presence in California do not require withholding.

• Misconception 6: A payee can ignore the form if they have a valid Taxpayer Identification Number (TIN).

Even with a valid TIN, the payee must still complete and submit Form 587 to establish withholding requirements.

• Misconception 7: Once a waiver is granted, the payee is exempt from filing taxes.

A waiver does not eliminate the requirement to file a California tax return. The payee must still report and pay any taxes owed.

• Misconception 8: The form is only for tax purposes.

While it is primarily a tax form, it also serves to document the nature of the payments and the residency status of the payee.

• Misconception 9: The withholding agent is not responsible for the accuracy of the information on the form.

The withholding agent relies on the information provided by the payee. However, they should ensure that the form is completed accurately to avoid issues.

How to Use California 587

Filling out the California Form 587 is an essential step for nonresidents receiving certain payments in California. This form helps determine the withholding amount for income taxes. After completing the form, it should be returned to the withholding agent for processing. It's important to ensure all information is accurate to avoid any issues with tax compliance.

1. Obtain the Form: Download the California Form 587 from the California Franchise Tax Board website or request a copy from the withholding agent.
2. Complete Part I: Fill in the withholding agent's name, address, and contact information.
3. Move to Part II: Enter the nonresident payee’s name and address. If the payee is a sole proprietor, include the owner's full name.
4. Provide Identification: Check the appropriate box for the payee’s identification number (SSN, ITIN, CA Corp no., FEIN, or SOS file number).
5. Select Entity Type: Indicate the payee’s entity type by checking the corresponding box (Individual, Corporation, Partnership, LLC, Estate, or Trust).
6. Fill Out Part III: Choose the type of payment the nonresident payee will receive by checking the appropriate box.
7. Complete Part IV: List expected gross payments from the withholding agent for services within and outside California. Provide totals for each category.
8. Review Withholding Threshold: Remember that withholding is optional for the first $1,500 in payments made during the calendar year.
9. Sign and Certify in Part V: The payee or authorized representative must sign, date, and provide a daytime telephone number to certify the information is true.
10. Return the Form: Submit the completed Form 587 to the withholding agent for processing.