Before you start

An SSN or ITIN
Form W-4 with your employer for federal withholding
California Form DE 4 for state withholding
Records of foreign income and foreign financial accounts

Step-by-step

1
Complete the W-4 and DE 4 on day one
These set your federal and California withholding. Getting them wrong is the most common cause of an unexpected April bill. California uses its own DE 4 rather than relying on the federal W-4, and defaults can under-withhold badly for a two-income household.
Via employerWho: YouFirst week of employment
2
Determine your US tax residency
The substantial presence test counts weighted days across three years to decide whether you are taxed on worldwide income or only on US-source income. Certain students and scholars are exempt from counting days for a period. Your visa category does not decide this.
OnlineWho: You
3
Check for an applicable tax treaty
The US has income tax treaties with around 70 countries which can reduce or exempt tax on specific income types, particularly for students, researchers and short assignments. Note that California does not follow federal treaty exemptions — a treaty can exempt income federally and still leave it fully taxable by the state.
OnlineWho: You
4
File federal and California returns by 15 April
The tax year is the calendar year. Federal and state are separate filings though software handles both. An extension moves the filing deadline, not the payment deadline.
OnlineWho: YouBy 15 April annually
5
File an FBAR if foreign accounts exceed $10,000
If your foreign financial accounts total more than $10,000 at any point in the year, you must file a report with FinCEN, separately from your tax return. Keeping a normal account at home is enough to cross the threshold.
OnlineWho: You
6
Get professional help for the arrival year
Part-year residency, treaty positions, equity compensation and foreign income tend to arrive together. Bay Area compensation is often heavily equity-weighted, which makes the first return considerably more complex than a salary-only one.
In personWho: You

Documents you’ll need

Form W-2 from each employer, issued by 31 January
Form 1099s for freelance, interest and investment income
Equity compensation statements — RSU vesting, ESPP and option exercise records
Passport and travel history for the substantial presence day count
Foreign account statements for FBAR reporting

Things most newcomers don’t know

SDI became uncapped on 1 January 2024, and it is a real pay cut for high earners.

State Disability Insurance used to stop at a wage ceiling; it now applies to every dollar of wages, at 1.3% for 2026. On a $400,000 salary that is over $5,000 a year that older comparisons — and most 'California vs Texas' salary calculators — simply do not include.

Source: California EDD — contribution rates and withholding schedules

California does not honour federal tax treaties.

Income exempted from federal tax by a treaty is generally still taxable by California. Students and researchers who correctly claim a treaty exemption federally are often surprised by a California bill on the same income. This trips up academic and research arrivals every year.

Source: California Franchise Tax Board — nonresidents and part-year residents

San Francisco levies no personal income tax, unlike New York City.

The city taxes businesses through a gross receipts tax but does not tax residents' income. So while California's state rate is far higher than New York's for high earners, a New Yorker also pays up to 3.876% to the city on top. Compare state-plus-local, not state alone.

Source: California Franchise Tax Board — tax calculator, tables and rates

Equity compensation is where Bay Area newcomers get hurt.

RSUs are taxed as ordinary income when they vest, and the default withholding rate applied by many employers is below what a high earner actually owes, leaving a large April bill. If a significant part of your package is equity, model the liability in your first quarter rather than at filing.

Source: IRS — equity compensation and withholding

Common mistakes to avoid

Ignoring the DE 4 and relying on federal W-4 defaults, which under-withholds for California.
Assuming a federal treaty exemption also applies to California — it generally does not.
Using a salary calculator that predates the uncapping of SDI on 1 January 2024.
Being under-withheld on vesting RSUs and meeting a five-figure bill in April.
Missing the FBAR because a home-country account did not feel like a 'foreign account'.

Some of this may be out of date. Spotted something inaccurate? Help us keep it right for the next newcomer.

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