California Form 592: Filing Periods, Payees, and Penalties

California Form 592 is the Resident and Nonresident Withholding Statement that a withholding agent files with the Franchise Tax Board to report income tax withheld from payments of California-source income to nonresidents. The rate is 7% on cumulative payments to a payee that exceed $1,500 in a calendar year, and the form is filed four times a year on a periodic schedule rather than once annually.¹ Getting it right matters: an agent who fails to withhold can be held personally liable for the tax that should have been collected, plus interest and penalties.

Who Has to File

The obligation falls on the withholding agent, meaning any person or entity that controls payment of California-source income to a nonresident. That includes businesses, partnerships, estates, trusts, and individuals. If you issue the payment and the payee is a nonresident, you are the withholding agent.²

“Nonresident” for this purpose covers individuals who do not live in California, corporations not qualified to transact business in the state, and partnerships or LLCs with no permanent place of business here. Estates and trusts without a resident grantor or beneficiary are included as well.

Withholding on payments to California residents is optional. If you choose to withhold from a resident, though, you must follow the same rules and report it on Form 592.²

What Payments Are Subject to Withholding

Only California-source income triggers withholding, meaning the activity generating the income took place in the state. Common examples are payments for services performed in California, rents from California property, royalties, and distributions from California-based pass-through entities.¹ Payments for goods are not subject to withholding, regardless of amount.³

Withholding is optional on the first $1,500 of California-source payments to a nonresident during a calendar year. Once cumulative payments cross that threshold, you withhold 7% of the gross payment. Because the threshold is cumulative, you need to track running totals for each nonresident payee.³

Sales of California real property are not reported on Form 592. That withholding runs on a separate track and is reported on Form 593.⁴

When a nonresident performs services partly inside and partly outside California, use Form 587, the Nonresident Withholding Allocation Worksheet, to split the payment between California and non-California sources before applying the 7% rate. Only the California-source portion is subject to withholding.⁵

Backup Withholding

California backup withholding is also 7%, but it bites harder. It applies when a payee fails to furnish a taxpayer identification number, provides an invalid one, or does not certify exemption from backup withholding. If the IRS requires federal backup withholding on a payment, California generally requires it too.⁶ There is no $1,500 threshold, no waiver available, and backup withholding overrides other types of withholding.¹

The Four Filing Periods and Due Dates

Form 592 is not an annual return. You file a separate Form 592 for each of four periods in the calendar year, and each filing covers only the withholding that occurred during that window. For 2026, the schedule is:¹

January 1 through March 31: due April 15, 2026
April 1 through May 31: due June 15, 2026
June 1 through August 31: due September 15, 2026
September 1 through December 31: due January 15, 2027

When a due date falls on a weekend or holiday, it rolls to the next business day. The Schedule of Payees in each filing lists only the payees withheld upon during that specific period.

Pass-through entities follow a different track. Partnerships and LLCs remit quarterly using Form 592-Q and file an annual reconciliation on Form 592-PTE by January 31 of the following year.⁴

Completing and Submitting Form 592

Start with the agent’s name, address, and federal or state identification number at the top of the form. The core of the return is the Schedule of Payees, where you report each recipient of California-source income for the period:

Name and address
Taxpayer identification number
Type of income (rents, services, partnership distributions, or other categories)
Amount of California-source income paid
Amount of tax withheld

The total withholding reported on the face of the form must equal the sum of the per-payee amounts on the Schedule of Payees. Mismatches are a common error and draw FTB attention. Before filing, confirm your reported withholding matches what you have already remitted.

If you owe a balance when you file, include Form 592-V, the Payment Voucher for Resident and Nonresident Withholding, with your check or money order and mail both to the FTB’s Withholding Services and Compliance office in Sacramento.⁷ Do not submit the voucher if you pay electronically or if no balance is due.

Electronic filing is mandatory when the Schedule of Payees contains more than 250 payees. In that case, use the FTB’s Secure Web Internet File Transfer (SWIFT) system rather than paper.³ Below that threshold, paper or electronic filing is your choice.

Giving Payees Form 592-B

Separate from your filing with the FTB, you must give each payee Form 592-B, the Resident and Nonresident Withholding Tax Statement, showing the total withholding reported for the tax year. Form 592-B is provided to the payee only; it is not submitted to the FTB.¹

The payee uses it to claim a credit on their California income tax return, such as Form 540NR. Late or incorrect payee statements are treated as information return failures and are subject to penalties.

Exemptions, Waivers, and Reduced Withholding

Not every payment to every nonresident triggers withholding. The documentation and the form depend on why the payee claims relief.

Form 590, the Withholding Exemption Certificate, is completed and signed by the payee and given to you before payment. An agent who relies in good faith on a valid, completed Form 590 is shielded from liability.⁸ Categories eligible to certify exemption include:

California residents
Corporations qualified to transact business in California
Tax-exempt entities under federal or California law
Insurance companies, IRAs, and qualified pension plans

Withholding is also not required for payments to an S corporation, partnership, or LLC that maintains a permanent place of business in California. Keep exemption documentation on file for at least five years and produce it on request.¹

If a nonresident payee believes 7% will significantly exceed their actual California tax liability, they can request a full waiver by filing Form 588, the Nonresident Withholding Waiver Request, at least 21 business days before you make the payment. You cannot stop withholding until the FTB issues a written Waiver Determination Notice.⁹ Foreign (non-U.S.) partners and members cannot use Form 588; they use Form 589 instead.

Form 589, the Nonresident Reduced Withholding Request, lets a payee itemize direct business expenses against California-source income to justify a lower withholding amount. Claimed expenses generally cannot exceed 50% of the gross California-source payment, with an exception for foreign partners and members reporting effectively connected taxable income. The request must be filed at least 21 business days before payment, and you must retain the FTB’s approval letter to support the reduced rate.¹⁰

Fixing a Filed Form 592

If you reported information incorrectly on the right tax year form (wrong TIN, wrong withholding amount, and the like), file a new Form 592 for the same tax year, check the “Amended” box at the top left, and enter all corrected information without using negative numbers. Attach a letter explaining the corrections and mail it to the same address as the original.¹¹

If you used the wrong tax year form entirely, the fix uses two forms: a new unchecked Form 592 for the correct tax year with the accurate information, and an amended Form 592 for the originally filed (wrong) year showing $0.00 for the total and each payee. Mail both together. Only the withholding agent can file an amended Form 592.¹¹

Penalties and Personal Liability

The FTB assesses penalties per payee for each incomplete, incorrect, or late Schedule of Payees. For tax years beginning on or after January 1, 2026, the amounts increased on a tiered schedule:¹

1 to 30 days late: $60 per payee
31 days to 6 months late: $130 per payee
More than 6 months late: $340 per payee

These penalties add up quickly across a Schedule of Payees. Interest on underpayments is charged at 7% for the period through June 30, 2026.¹²

Separate from information return penalties, an agent who fails to withhold at all can be held personally liable for the full tax that should have been collected. That liability stands independently of anything the payee may owe on their own California return.

Coordination with Federal Withholding

California withholding runs parallel to the federal system but on its own schedule and its own rules. Federal reporting for nonresident aliens uses Form 1042-S, due to the IRS by March 15. Form 592 follows the four-period calendar described above, not a single annual filing.

The biggest trap for foreign payees: federal income tax treaty exemptions do not carry over to California. A nonresident alien whose income is exempt from federal withholding under a treaty still owes California withholding at 7% on California-source income. Do not assume a federal treaty exemption lets you skip the state side.

Backup withholding, by contrast, is linked. If the IRS tells you federal backup withholding applies to a payee, California requires its own 7% backup withholding as well, and both continue until the underlying issue (such as a missing or invalid TIN) is resolved.⁶

1
Franchise Tax Board. 2026 Instructions for Form 592 Resident and Nonresident Withholding Statement
2
Legal Information Institute. California Code 18 CCR 18662-4 – Withholding on Payments to Nonresident Individuals and Non-California Business Entities
3
Franchise Tax Board. Withholding on Nonresidents
4
Legal Information Institute. California Code 18 CCR 18662-8 – Reporting and Remitting Amounts Withheld, Penalties, and Interest
5
Franchise Tax Board. 2025 Instructions for Form 587 Nonresident Withholding Allocation Worksheet
6
Franchise Tax Board. Backup Withholding
7
Franchise Tax Board. 2025 Form 592-V Payment Voucher for Resident and Nonresident Withholding
8
Franchise Tax Board. 2025 Instructions for Form 590 Withholding Exemption Certificate
9
Franchise Tax Board. 2025 Instructions for Form 588 Nonresident Withholding Waiver Request
10
Franchise Tax Board. 2026 Instructions for Form 589 Nonresident Reduced Withholding Request
11
Franchise Tax Board. 2025 Instructions for Form 592 Resident and Nonresident Withholding Statement
12
Franchise Tax Board. Interest and Estimate Penalty Rates