Gov and search for withholding requirements for updates, online tools, and more information, including: Forms and Publications Use Form 588, Nonresident Withholding Waiver Request, to request a waiver from withholding on payments of California source income to nonresident payees.Payments made to nonresident directors of a corporation for attending board meetings in California. Form 587, the payee agrees to promptly notify the withholding agent of any changes in the facts. Withholding of tax at source is required for payments of California source income made to nonresident individuals and non-California business entities. Wages paid to California residents for services performed both within and outside the state are subject to state income tax withholding. Use Form 587, Nonresident Withholding. Allocation Worksheet, to determine if withholding is required and the amount of California source income subject to. The FTB concluded that independent director income should not be sourced in part to California based on attendance at a board meeting in California. See What is backup withholding, later.