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 the 7% California income tax withheld from payments of California-source income to nonresidents. It is not an annual return. You file a separate Form 592 for each of four periods during the calendar year, and if you fail to withhold when you should have, the FTB can hold you personally liable for the tax, plus interest and penalties.¹

Who Files as the Withholding Agent

The obligation falls on whoever controls the payment. That can be a business, a partnership, an estate, a trust, or an individual. If you cut the check and the payee is a nonresident, you are the withholding agent.²

“Nonresident” here covers individuals who do not live in California, corporations not qualified to transact business in the state, and partnerships or LLCs without a permanent California place of business. Estates and trusts without a resident grantor or beneficiary are also nonresidents for this purpose.

Withholding from a California resident’s payment is optional. If you choose to do it anyway, you follow the same rules and report it on Form 592.²

What Payments Trigger Withholding

Only California-source income counts. Common examples include payments for services performed in California, rents from California property, royalties, and distributions from California-based pass-through entities.¹ Payments for goods are never subject to withholding, regardless of amount.³

Withholding is optional on the first $1,500 of California-source payments to a nonresident during the calendar year. Once cumulative payments cross that threshold, you must withhold 7% of the gross payment. Track running totals per payee so you know when the threshold is crossed.³

When a nonresident performs services partly inside and partly outside California, Form 587 (Nonresident Withholding Allocation Worksheet) is used to split the payment between California and non-California sources. Only the California portion is subject to the 7%.⁴

Two boundaries to keep straight. Sales of California real property use Form 593, not Form 592. And pass-through entities withholding on distributions to nonresident owners remit quarterly on Form 592-Q and reconcile annually on Form 592-PTE by January 31, on a track separate from the Form 592 schedule below.⁵

Backup Withholding Is Stricter

California backup withholding is also 7%, but it applies when a payee fails to provide a valid taxpayer identification number or does not certify exemption. There is no $1,500 threshold, no waiver, and it overrides other withholding types. If the IRS requires federal backup withholding on a payment, California generally requires it too.⁶¹

The Four Filing Periods and Due Dates

Form 592 is filed four times a year. Each filing covers only the withholding that occurred during its assigned span, and each has its own Schedule of Payees listing every payee withheld upon 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

If a due date falls on a weekend or holiday, it moves to the next business day.

Completing Form 592

Enter your name, address, and federal or state identification number at the top. The body of the form is the Schedule of Payees, where you list every recipient you withheld from during the period. For each payee, provide:

Name and address.
Taxpayer identification number. The FTB uses this to credit the withholding to the payee’s account, so accuracy is essential.
Type of income, such as rents, services, or partnership distributions.
Amount of California-source income paid.
Amount of tax withheld.

The total withholding on the face of the form must equal the sum of the individual amounts on the Schedule of Payees. Mismatches are one of the most common errors and reliably attract FTB attention.

If you owe a balance with the filing, include Form 592-V (Payment Voucher for Resident and Nonresident Withholding) with your check or money order. Do not send Form 592-V if you are paying electronically, and do not send it at all if no balance is due.⁷

Electronic filing through the FTB’s Secure Web Internet File Transfer (SWIFT) system is mandatory once your Schedule of Payees exceeds 250 payees. Below that count, paper or electronic is your choice.³

Exemptions, Waivers, and Reduced Withholding

Not every payment triggers withholding. A payee can certify an exemption on Form 590 (Withholding Exemption Certificate), which they complete and give to you before payment. If you rely in good faith on a valid Form 590, you are shielded from liability for not withholding.⁸

Categories eligible to certify on Form 590 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 on payments to an S corporation, partnership, or LLC that maintains a permanent place of business in California. Keep the exemption documentation on file for at least five years and produce it on FTB request.¹

If the 7% rate will significantly exceed the payee’s actual California tax liability, the payee can request a full waiver on Form 588 (Nonresident Withholding Waiver Request). The request must be submitted to the FTB at least 21 business days before payment, and you cannot stop withholding until you receive the FTB’s written Waiver Determination Notice. Foreign (non-U.S.) partners and members cannot use Form 588.⁹

Alternatively, a payee can request a reduced withholding amount on Form 589 (Nonresident Reduced Withholding Request), itemizing direct business expenses such as advertising, commissions, contract labor, insurance, professional fees, equipment rentals, supplies, and travel. Total claimed expenses cannot exceed 50% of the gross California-source payment, with an exception for foreign partners and members reporting effectively connected taxable income. Personal expenses, depreciation, charitable contributions, and fines cannot be claimed. Form 589 also requires 21 business days’ notice, and you keep the FTB’s approval letter to support the reduced amount.¹⁰

Give Each Payee Form 592-B

Separate from what you send the FTB, you must give each payee a Form 592-B (Resident and Nonresident Withholding Tax Statement) showing the total withholding reported for them for the tax year. The payee uses it to claim the credit on their California return, such as Form 540NR. Do not send Form 592-B to the FTB. Late or incorrect payee statements carry their own information return penalties.¹

Amending a Filed Form 592

The correction procedure depends on the error. Only the withholding agent can file the amendment.¹¹

If you filed with the correct tax year but the information was wrong (a bad TIN, an incorrect amount), complete a new Form 592 for the same tax year, check the “Amended” box at the top left, and enter all corrected information. Do not use negative numbers. Attach a letter explaining the corrections, and mail it to the same address as the original.

If you filed on the wrong tax year’s form, you need two forms. Complete a new Form 592 on the correct tax year with all accurate information and leave the “Amended” box unchecked. Then complete another Form 592 on the originally filed (wrong) tax year, check the “Amended” box, and enter $0.00 for both the total withholding and each payee’s withheld amount. Mail both together.¹¹

Penalties and Interest

The FTB assesses per-payee penalties for each incomplete, incorrect, or late Schedule of Payees. For tax years beginning on or after January 1, 2026, the tiers are: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 stack fast. A withholding agent with 20 payees who files seven months late owes $6,800 in penalties before any interest on unpaid withholding. Through June 30, 2026, the FTB charges 7% interest on underpayments.¹²

Beyond information return penalties, a withholding agent who fails to withhold at all can be held personally liable for the full amount that should have been collected. That liability is independent of anything the payee owes on their own California return.

Where California Diverges from Federal Rules

The one difference that catches foreign payees off guard: 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. If you work with foreign payees, do not assume a federal treaty exemption lets you skip California withholding.

Federal reporting for nonresident aliens uses Form 1042-S, due to the IRS by March 15. California’s schedule is entirely different, as set out above. Backup withholding, by contrast, is linked: an IRS notice requiring federal backup withholding also triggers California’s 7% backup withholding 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
Franchise Tax Board. 2025 Instructions for Form 587 Nonresident Withholding Allocation Worksheet
5
Legal Information Institute. California Code 18 CCR 18662-8 – Reporting and Remitting Amounts Withheld, Penalties, and Interest
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