California Wages on IRS Form W-2
Generally, the California wages reported on a taxpayer’s W-2 will be the same as the federal. However, there are specific cases in which taxpayers may need to report their income differently on federal tax returns and California state tax returns.
Watch for the following which could cause state wages to differ:
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Ridesharing benefits or sick pay: California excludes from income ridesharing benefits (see more below) and sick pay received under the Federal Insurance Contributions Act and Railroad and Retirement Act.
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Income exempted by U.S. tax treaties: Certain income may be excluded from a taxpayer’s income under a U.S. tax treaty, or a taxpayer may claim a foreign earned income exclusion for federal purposes., This income is generally not excludable for California purposes.
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Health savings accounts: California has not adopted health savings accounts, so employer-provided contributions are not excludable from California wages.,
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Health benefits for non-dependent RDPs: Unlike Federal, California does not tax employer-provided health insurance and medical reimbursements for registered domestic partners (RDPs) who are not dependents. See chapter 1.12.
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Meals and Lodging for Convenience of Employer : Although not subject to personal income tax (conforms to federal law), the income is subject to Unemployment (UI) Tax, Employment Training Tax (ETT) and State Disability Insurance (SDI). Of these three taxes, only SDI will be withheld from the employee’s wages and will appear on the Form W-2. The UI tax and ETT are payable by the employer.