CA Form 590 Instructions: Exemptions, Filing, and Penalties

California Form 590, the Withholding Exemption Certificate, is the document a payee gives a California withholding agent to certify that the state’s 7% nonresident income tax withholding should not apply to payments made to them. The instructions for Form 590 are straightforward: fill in the withholding agent’s details, your own name, address, and taxpayer identification number, check exactly one exemption box that matches your status, then sign and date under penalty of perjury. The completed form goes to the payer, not to the Franchise Tax Board.¹

Why the Form Matters: The 7% Default

California Revenue and Taxation Code Section 18662 requires withholding on California-source payments to nonresidents, and the categories are broad: compensation for services, rents, royalties, dividends, partnership distributions, prizes, and annuities among them.² Without a valid exemption certificate on file, the withholding agent must take 7% off any California-source payment that exceeds $1,500 in a calendar year. The 7% applies only to the amount above $1,500, not the whole payment. Below that threshold, withholding is at the agent’s discretion.³

That 7% is a flat rate, not your final tax. If your actual California liability is lower, you would have to file a California return to recover the difference. A valid Form 590 keeps that money in your hands up front.

One detail trips people up: an incomplete or unsigned certificate is treated as no certificate at all. A missing signature, a blank TIN field, or two boxes checked instead of one means the withholding agent has to withhold 7% until a corrected form arrives.²

Choosing the Right Exemption Box

Form 590 lists several exemption reasons. Check exactly one.

Individuals certifying California residency. You live in California at the address on the form, and you agree to notify the withholding agent promptly if you move out of state.¹
Corporations with a permanent place of business in California, or that are qualified through the California Secretary of State to do business in the state. The corporation must file a California tax return.²
Partnerships or LLCs with a permanent place of business in California or registered with the Secretary of State, subject to California law, and committing to file a California return.¹
Tax-exempt entities under Internal Revenue Code Section 501(c) or California Revenue and Taxation Code Section 23701. Specify the applicable subsection letter or number on the form.¹
Insurance companies, IRAs, and qualified pension or profit-sharing plans. These share a single box.¹

Some payees never need the form at all. The United States government and its agencies, state and local governments, and foreign governments with their political subdivisions are excluded from the withholding requirement entirely.²

Filling Out the Form, Field by Field

Withholding Agent Information

At the top of the form, enter the name and address of the withholding agent, meaning the business or person paying you. This is the party that will keep the certificate on file.

Payee Information and TIN

Enter your name, address, and taxpayer identification number. Check the box that matches your TIN type. Five types are accepted: Social Security Number, Individual Taxpayer Identification Number, Federal Employer Identification Number, California corporation number, or California Secretary of State file number.² A missing or invalid TIN voids the whole certificate, so check this field carefully.

Exemption Reason

Check only one box, matching your situation to the categories above. An individual claiming residency is certifying current California residency at the address shown. A business entity is certifying either a permanent California place of business or Secretary of State qualification, together with the obligation to file a California return.

Signature and Date

Sign and date under penalty of perjury. The signature line includes your agreement to notify the withholding agent promptly if your exemption status changes.¹

Since November 2023, the FTB accepts photocopied, faxed, or scanned signature pages with original signatures on paper documents, as long as they are legible and unmodified. Keep the original available in case the FTB asks for it.⁴

Substitute Letters

A payee can submit a letter in place of the actual form if the withholding agent agrees to accept it. The letter has to carry the same information in similar language, including the under-penalty-of-perjury statement and the TIN.² Most agents prefer the actual form because completeness is easier to verify.

When Form 590 Is the Wrong Form

Form 590 covers California residency and permanent-presence exemptions. Several related situations require a different form, and using Form 590 will not help.

Form 590-P is for nonresident S corporation shareholders, partners, and LLC members receiving a current-year distribution of a prior year’s California-source income already reported on a prior California return. Residents and payees with a permanent California place of business should still use Form 590.⁵

Form 587 is the allocation worksheet for nonresident payees who perform services both inside and outside California. Only the California portion gets withheld on. Form 587 separates the California-source amount from the rest; for payees that are part of a larger unitary business, the split uses the California apportionment percentage instead of a geographic calculation.⁶

Form 593 handles California real estate sales and transfers under a separate withholding regime that kicks in when the sale price exceeds $100,000. It also applies to installment payments, exercised options, and failed like-kind exchanges.⁷ If you are selling California real property, Form 590 is not the right form.

A Note for Foreign Payees

California does not conform to federal income tax treaties. A treaty that exempts your income from federal tax does nothing to shield it from California withholding, and a federal Form W-8 has no effect for California purposes. A foreign entity that meets one of the standard Form 590 categories, such as having a permanent place of business in California, can still use the form. Nonresident aliens with California-source income file Form 540NR to report it.⁸

What Happens to the Form After You Sign

Give the completed Form 590 directly to the withholding agent. Do not send it to the Franchise Tax Board. The agent keeps it on file for at least five years after the last payment it applies to.²

The certificate has no set expiration and does not require annual renewal. It stays valid until the payee’s status changes.² If you move out of California, lose your permanent place of business in the state, lose tax-exempt status, or otherwise no longer qualify, notify the withholding agent right away so they can start withholding or request a new form.

Penalties for Getting It Wrong

The weight falls on the withholding agent. An agent who fails to withhold when required is liable for the greater of the amount that should have been withheld or the actual tax owed by the payee, capped at the required withholding amount. The FTB can also impose a penalty equal to the greater of 10% of the amount that should have been withheld or $500, with interest accruing on unpaid withholding from the due date forward.⁹ From mid-2025 through mid-2026, that interest rate sits at 7%.¹⁰

A properly completed Form 590 shields the withholding agent from these penalties unless the agent actually knows the certificate is false. Knowingly accepting a fraudulent certificate removes that protection and exposes the agent to the full set of failure-to-withhold penalties.³ For the payee, signing under penalty of perjury means a false certification can lead to perjury charges and additional tax penalties. The form is not a formality.

1
Franchise Tax Board. 2026 Form 590 Withholding Exemption Certificate
2
Franchise Tax Board. 2025 Instructions for Form 590 Withholding Exemption Certificate
3
Cornell Law Institute. California Code of Regulations 18 CCR 18662-4 – Withholding on Payments
4
Franchise Tax Board. Signature Options for Paper Tax Returns and Other Documents
5
Franchise Tax Board. 2025 Form 590-P Nonresident Withholding Exemption Certificate for Previously Reported Income
6
Franchise Tax Board. 2025 Instructions for Form 587 Nonresident Withholding Allocation Worksheet
7
Cornell Law Institute. California Code of Regulations 18 CCR 18662-3 – Real Estate Withholding
8
Franchise Tax Board. FTB Publication 1017 Resident and Nonresident Withholding Guidelines
9
California Legislative Information. California Revenue and Taxation Code Section 18668
10
Franchise Tax Board. Interest and Estimate Penalty Rates