Hi,

I worked in California from 08/30/2006 through 12/31/2006 for the year 2006. My company is in Texas and I filed my 2006 tax return before April 14th 2007 while I was in California. Now I received a letter from STATE OF CALIFORNIA stating that I have to file a California return. Since, my company is located in Texas and I am not a resident of California I think I don't have to file a California tax return. Please advise.

You were present in CA from 08/30/2006 to 12/31/2006 so any income earned while in CA must be reported to CA. If you are present in a state, then any income earned during this period, must be reported to the state.

If you live and work is a state but your employer is from another state, then your income is only subject to the state where you live and work. Read: Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)

Thanks MukatA for your answer.
Since I have already filed my tax return back in 2007, what should I do now?
Should I just file 540NR for the time I stayed in California?

Yes, you will file CA nonresident tax return for 2006 reporting income you earned during the period you were in CA. On the tax due, you will pay interest and penalty. You can attach a letter of request for the waiver of penalty giving your reasons.