CA Form 590 Instructions: Exemptions, Filing, and Penalties

California Form 590, the Withholding Exemption Certificate, is the one-page form a payee gives to a California withholding agent to certify that the state’s 7% nonresident withholding should not apply to their payments. You complete it by identifying the withholding agent and yourself, entering a valid taxpayer identification number, checking the single exemption box that fits your status, and signing under penalty of perjury. The form goes to the payer, not to the Franchise Tax Board.¹

Why the Form Matters

California Revenue and Taxation Code Section 18662 requires anyone paying California-source income to a nonresident to withhold 7% of the amount that exceeds $1,500 in a calendar year and send it to the FTB. The rule reaches broadly: compensation for services, rents, royalties, dividends, partnership distributions, prizes, and annuities all fall within it.¹ Below the $1,500 threshold, withholding is at the payer’s discretion.²

A properly completed Form 590 stops that withholding at the source. Without one on file, the payer has no basis to skip withholding, and if the form is incomplete or unsigned it is treated as invalid, meaning the 7% comes off until a corrected certificate arrives.¹ The 7% is a flat withholding rate, not a final tax figure, so any amount withheld beyond actual California liability can only be recovered by filing a California return.

Filling Out the Form

Withholding Agent Information

At the top, enter the name and address of the business or person paying you. This is who will retain the certificate on file.

Payee Name, Address, and TIN

Enter your name, address, and taxpayer identification number, then check the box that identifies the type of number you used. The form accepts five: Social Security Number, Individual Taxpayer Identification Number, Federal Employer Identification Number, California corporation number, or California Secretary of State file number.¹ A missing or wrong TIN invalidates the entire certificate, so double-check this box before signing.

Check One Exemption Reason

The middle of the form is a list of exemption categories. Check exactly one. Two checks, or none, invalidates the form.

Individuals certifying California residency. You live in California at the address on the form. If you later move out of state, you must notify the withholding agent promptly.³
Corporations. The corporation has a permanent place of business in California or is qualified through the California Secretary of State to do business in the state, and it will file a California return.¹
Partnerships or LLCs. The entity has a permanent California place of business or is registered with the Secretary of State, is subject to California law, and will file a California return.³
Tax-exempt entities. Organizations exempt under Internal Revenue Code Section 501(c) or California Revenue and Taxation Code Section 23701. Write in the applicable subsection letter or number.³
Insurance companies, IRAs, or qualified pension and profit-sharing plans. These share a single box.³

Some entities do not need Form 590 at all because they are excluded from the withholding requirement outright: the United States government and its agencies, state and local governments, and foreign governments and their political subdivisions.¹

Signature and Date

Sign and date the form. Your signature is a declaration under penalty of perjury that the information is correct and that you will notify the withholding agent promptly if your exemption status changes.³

Where the Form Goes and How Long It Lasts

Hand or send the completed form to the withholding agent. Do not mail it to the Franchise Tax Board. The withholding agent keeps the certificate on file for at least five years after the last payment it covered.¹

Form 590 does not expire on a set schedule and does not need annual renewal. It stays valid until the payee’s status changes.¹ Moving out of California, losing a permanent place of business in the state, or losing tax-exempt status all trigger the notification obligation. Once the payer knows the status has changed, they must resume withholding until a new valid certificate arrives.

When Form 590 Is Not the Right Form

Several California withholding situations that look like Form 590 territory actually require a different form. Using 590 in these cases leaves the payer without valid documentation.

Form 587 for Mixed In-State and Out-of-State Services

When a nonresident performs services partly inside and partly outside California, only the California portion is subject to withholding. Form 587 is the allocation worksheet that separates the California-source amount from the rest. If the payee’s California work is part of a larger unitary business operating across multiple states, the split is done by California apportionment percentage rather than a simple geographic breakdown.⁴

Form 590-P for Previously Reported Pass-Through Income

Nonresident S corporation shareholders, partners, and LLC members who receive current-year distributions of prior-year California-source income use Form 590-P rather than Form 590. Withholding again on income already reported would double-count it. California residents and payees with a permanent California place of business still use Form 590, not 590-P.⁵

Form 593 for California Real Estate Sales

Sales and transfers of California real property run through a separate withholding regime using Form 593. Real estate withholding applies when the sale price exceeds $100,000 and reaches installment payments, exercised options, and failed like-kind exchanges.⁶ Form 590 does nothing for a property sale.

Foreign Payees

California does not conform to federal income tax treaties. A treaty that exempts your income from federal tax has no effect on California withholding, and a federal Form W-8 claiming treaty benefits does not substitute for Form 590. A foreign entity that meets one of the standard Form 590 categories, such as a permanent California place of business, can still claim exemption on the form. Nonresident aliens who receive California-source income file Form 540NR, the California Nonresident or Part-Year Resident Income Tax Return.⁷

Penalties for Getting It Wrong

Most of the penalty exposure falls on the withholding agent, which is why payers scrutinize incoming Form 590s.

A withholding agent that fails to withhold when required is liable for the amount that should have been withheld or the actual tax owed by the payee, whichever is greater, up to the amount required to be withheld. The FTB can add a penalty equal to the greater of 10% of the amount that should have been withheld or $500, plus interest from the original due date.⁸

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 strips the protection and reopens the full range of failure-to-withhold liability.² For the payee, the under-penalty-of-perjury signature means a false certification can lead to perjury charges and additional tax penalties. The form is short, but it is not a rubber stamp.

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