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State of California

Franchise Tax Board

FAQs
Frequently Asked Questions

About the Income Taxation


of Native Americans

FTB 674 (REV 08-2007)


1 What is Indian country? 4 What if I meet all of the requirements to be exempt
from California taxation and also earn income from
Indian country is:
sources outside of Indian country?
• All land within any Indian reservation under the
Your Indian country income is exempt from California
jurisdiction of the United States Government, including
taxation if you meet the requirements. However, California
rights-of-way running through the reservation.
taxes income you earn outside of Indian country. This
• All dependent Indian communities within the includes income you earn from tribes of which you are
borders of the United States under the jurisdiction not member or income you earn outside of California.
of the United States Government.
• All Indian allotments, the Indian titles to which have 5 What if all my income is from Indian country sources,
not been extinguished, including rights-of-way running but I live outside Indian country?
through the allotments. If you live outside of Indian country and within California,
California taxes all income including income from
2 If I live in California Indian country, am I considered Indian country sources.
a California resident?
Yes. Even if you live in Indian country, you are considered 6 What if my only income is from sources outside
a California resident. Indian country or from sources outside California?
For California purposes, your entire income is taxable.
3 I am Native American. Are my earnings exempt from California taxes the entire income of residents.
California income tax?
Generally, California taxes the entire income of residents 7 I am on active duty status with the U.S. military.
of the state and the California source income of non- My station is in California, but my military orders
residents. If you meet all of the following requirements, require me to live outside Indian country. Does
your income is exempt from California income tax: California tax my military pay if I am a member
of a California tribe?
• You must be a tribal member. For a list of federally
recognized Indian Tribes, go to the IRS Website at No. California treats members of California tribes
www.irs.gov. Search for Internal Revenue Service on active duty status as if they live within Indian
Bulletin Number 2002-42, Rev. Proc. 2002-64, country. California considers your military income
page 718. to come from tribal sources. California does not
tax your military income.
• You must live in your Tribe’s Indian country. Indian
country includes reservations, dependent Indian
communities, and Indian trust allotments.
• The income you earned must be sourced in the
same Indian country in which you live and where
you are a Tribal member.
8 What if I live outside of California, but I receive casino 12 Should I keep certain documents for state income
income from California Indian country sources? tax purposes?
If you are a nonresident Native American, California Yes. Keep documents that establish your tribal source
does not tax your share of income from tribal casino of the income and documents that establish your place
operations. California may tax other income, such as of physical residence. You will need the information
wages you receive from California sources while a if we examine the income exclusion for earned income
nonresident. For more information about California from Indian country sources. If we contact you and
residency, get FTB Publication 1031, Guidelines for request this information, you must respond in a timely
Determining Resident Status. manner even if you believe your income is exempt
and/or you did not file a California income tax return.
9 Do I have to file a California income tax return if I
live in California Indian country and all of my income 13 What documents should I keep to support my
is from the Indian country source where I live as a income exclusion for income I earned in my tribe’s
tribal member? Indian country?
No. California does not require you to file an income • Federal Form 1099-Misc and Form W-2, if you did
tax return. However, we recommend you file the return not attach them to your California return.
to show the amount of exempt income as an adjustment • Your federal tax return if you did not attach it to
on Form 540, Schedule CA. Also, if your income source your California return.
withholds tax from that income, you must file a California
resident income tax return to obtain a refund of the • The declarations page from your homeowners
withholding amount. or renters insurance policy showing your Indian
country address.
10 What documents should I attach to my California • The declarations page from your automobile insurance
income tax return? policies showing your Indian country address.
Attach copies of federal Form 1099, Miscellaneous • Department of Motor Vehicles documents showing
Income, and Form W-2, Wage and Tax Statement, your Indian country address (California driver’s
that show the details of your tribal income and license and any vehicle registrations).
non-tribal income. • Utility statements showing your Indian country address,
or a letter from a utility company that shows:
11 Should I attach a declaration regarding my tribal
- Customer and mailing address
membership, income sources, and place of residence?
- Service address
No. Do not attach additional documents to your return. - Timeframe the utility provided service at that address
If you claim some or all your income is exempt from
• Any other documents you believe verify or establish
California tax, show the adjustments on your Form 540,
your residence such as school records.
Schedule CA, California Adjustments, other income
line. If you use a P.O. Box, please list your physical
address in the blank spaces we provide on the Form 540,
Schedule CA, other income line.
14 If I am living with my parents, another relative, 16 I own two homes, one of which is a rental outside
or a friend in my Tribe’s Indian country, what other Indian country. If I possess a home in Indian
documents might I need available for an examination? country, is possession sufficient to make my income
Gather the following documents at the time you file exempt from tax?
your California return: No. You must show that your Indian country residence
• A declaration by your parents, relative, or friend is the residence in which you lived during the period
that shows: in question. In addition to the documents you need
for your primary home, save documents that pertain
- Physical address of your living accommodations
to your second home. For example, keep your lease
- The period when you lived there
agreements that list your tenants or utility bills in
• Utility statements, or a letter from a utility company your tenants’ names.
that shows:
- Your parents’, relative’s, or friend’s customer 17 I am married and my spouse and I live in his or her
mailing address tribe’s Indian country. Is the per capita distribution
- Service address from my tribe exempt from tax?
- Timeframe the utility provided service at that address No. You must live in your own tribe’s Indian country
• Any other documents you believe verify or establish for your income to be exempt from California taxation.
your residence, particularly if the document lists your
name. See the list in the answer to question 13. 18 Where can I get additional tax information?
Note: Examinations are conducted to determine tax Website: www.ftb.ca.gov
liabilities and filing requirements. Telephone: (800) 852-5711
Assistance for persons with disabilities: We comply
15 Can my tribe verify I live in Indian country? with the Americans with Disabilities Act. Persons with
We do not require proof from your tribe. If you get hearing or speech impairments, please call TTY/DDD
the documents from your tribe, it is not enough for (800) 822-6268.
your tribe to merely report your primary address
or address of record. 19 How can I request tax forms and publications?
You must provide documents that support where you Website: www.ftb.ca.gov
claim to live and the time period you lived at that location. Telephone: (800) 338-0505
Mail: TAX FORMS REQUEST UNIT
FRANCHISE TAX BOARD
PO BOX 307
Rancho Cordova CA 95741- 0307