Where San Francisco taxes differ from federal returns

San Francisco residents file the same federal return as everyone else, but you also owe San Francisco local income tax on wages earned in the city. This is separate from California state tax. The city tax rate is 1.5% of gross income, and you pay it whether you live in San Francisco or work there — the rule is based on where you earn the money, not where you sleep.

If you work outside San Francisco but live there, you do not owe the city tax on that income. If you work in the city but live elsewhere, you still owe it. The key is the location of your employer or your self-employment work.

You will file three returns in total: federal (IRS Form 1040), California state (Form 540), and San Francisco local (Form F-1040). The city return is the shortest of the three and uses information from your federal return.

Key Takeaways

  • San Francisco residents and workers owe city income tax at 1.5% on wages earned within city limits, in addition to federal and state taxes.
  • You file three separate returns: federal (IRS), California state (Franchise Tax Board), and San Francisco (Department of Finance).
  • The city return uses your federal adjusted gross income as its starting point, so file federal first.
  • important date are April 15 for federal and city returns, and May 15 for California state returns.
  • If you cannot pay by the important date, request an extension with the IRS, and it will cover all three returns.

Filing your federal return first

Start with your federal return because both your state and city returns depend on the number you report to the IRS. You can file on your own using tax software (TurboTax, H&R Block, FreeTaxUSA), through a tax preparer, or with free software if your household income is under $79,000 — the IRS Free File program offers this through participating companies.

Gather your W-2 forms from your employer by January 31, or 1099 forms if you are self-employed. If you have investment income, rental income, or other sources, collect those documents too. The federal return important date is April 15.

Once you have filed federally and received your confirmation, note your adjusted gross income (AGI) — this number goes directly onto your San Francisco return.

Completing the San Francisco local return

The San Francisco Department of Finance publishes Form F-1040 each year. You can read it from sfgov.org/finance or request a paper copy. The form is short: it asks for your name, address, filing status, and your federal AGI. You then calculate 1.5% of that income and pay the result.

If your employer withheld San Francisco tax from your paychecks, that amount appears on your W-2 in box 19 or 20 (labeled "Local taxes withheld"). Subtract what was withheld from what you owe. If more was withheld than you owe, you receive a refund. If less was withheld, you pay the difference.

Mail the completed form to the San Francisco Department of Finance, or file it online through the city's online portal if you have a login. The important date is April 15, the same as federal.

Filing your California state return

California uses Form 540 (or Form 540-2EZ if your situation is straightforward). You can file through the California Franchise Tax Board website, by mail, or through tax software. The state return also starts with your federal AGI and applies California's progressive tax rates, which range from 1% to 13.3% depending on income.

California allows you until May 15 to file, giving you an extra month past the federal important date. However, if you owe money, the interest clock starts on April 15, so paying by then saves you money even if you file the return later.

If you paid San Francisco local tax, you can deduct it on your California return as a local tax paid, which slightly reduces your state tax bill.

What to do if you cannot pay by April 15

Request a federal extension from the IRS using Form 4868. This gives you until October 15 to file and pay. The same extension automatically covers your San Francisco and California returns — you do not need to file separate extension requests with those agencies.

An extension to file is not an extension to pay. If you owe money, interest and penalties begin accruing on April 16 if you do not pay by April 15, even with an extension. Pay what you estimate you owe by April 15, then file the actual return later. You can adjust the payment when you file.

Self-employed residents and quarterly taxes

If you are self-employed or have business income, you owe federal self-employment tax (Social Security and Medicare), California state tax, and San Francisco local tax. You also must make quarterly estimated tax payments to the IRS and California on April 15, June 15, September 15, and January 15 of the following year.

San Francisco does not require quarterly payments — you pay the full city tax once a year with your annual return. However, if you do not pay enough in federal and state quarterly payments, you may owe a penalty even if your final annual bill is correct.

Use IRS Form 1040-ES to calculate your federal quarterly payments. The California Franchise Tax Board provides a similar worksheet for state estimates.

Where to file and track your return

Federal returns go to the IRS. You can file electronically through tax software or a preparer, or mail Form 1040 to the IRS address listed in the instructions (it varies by state). Track your federal return status at irs.gov using "Where's My Refund?"

California returns go to the Franchise Tax Board. File electronically through their website or tax software, or mail Form 540 to the address in the instructions. Track your state return at ftb.ca.gov.

San Francisco returns go to the Department of Finance. File online through sfgov.org/finance if you have a login, or mail the form to the address on Form F-1040. The city does not have a public tracking system, but you can call the Department of Finance at 311 or (415) 554-4500 to ask about your return status.

Frequently Asked Questions

Do I owe San Francisco tax if I work from home?

If your employer is located in San Francisco and you work from home, you owe the city tax. The tax is based on where your employer is, not where you physically work. If your employer is outside the city, you do not owe it, even if you live in San Francisco.

What if I moved to or from San Francisco mid-year?

You owe San Francisco tax only on income earned while you worked in the city. If you moved away in June, you owe tax on January through June income. Report your move on your return and calculate the tax on only the portion of the year you worked in the city.

Can I file all three returns at once with tax software?

Most major tax software (TurboTax, H&R Block) can file federal, California, and San Francisco returns in one session. The software calculates all three and submits them together. Check that your software supports San Francisco local tax before you start.

What happens if I miss the April 15 important date?

File as soon as you can. If you owe money, you will owe interest and penalties from April 16 onward. If you are owed a refund, there is no penalty for filing late, but you should file within three years or you lose the refund.

Is there a way to file for free if I earn more than $79,000?

The IRS Free File program ends at $79,000 household income. Above that, you can use low-cost software (often $60 to $150 for all three returns), a tax preparer, or a community tax clinic. Some nonprofits in San Francisco offer free tax preparation for residents — search "free tax preparation San Francisco" to find current programs.