3864: Group Nonresident Return Election (2025)
California · FTB · Used for tax years 2025
California Form 3864 is the annual election a business entity or corporation makes to file a group nonresident return on behalf of its electing nonresident individuals. It records the entity’s information, the numbers of electing and non-electing shareholders, partners, members,
Who files this form
A business entity or corporation that elects to file a group nonresident return must complete and sign Form FTB 3864 each year on behalf of its participating nonresident individuals.
To qualify for inclusion, a person must:
- Be an individual and a full-year nonresident of California.
- Have no California source income other than income from the business entity or corporation, unless the other California source income is reported on another group nonresident return.
Partnerships, LLCs, corporations, estates, trusts, and other entities cannot be included as participants. The form provides an exception for individual grantors of grantor trusts described under IRC Sections 671–679 that are not recognized as separate taxable entities for income tax purposes.
What you'll need
Have the following ready:
- Business information: Name, FEIN, California corporation number or Secretary of State file number, business address, principal California business address, and telephone number.
- Business activity information: Nature of the business and the state where its principal activity is conducted.
- Participant counts: Numbers of electing and non-electing shareholders, partners, members, or directors.
- Form 540NR: The group nonresident return to which Form FTB 3864 must be attached.
- The appropriate business return: Form 100, 100S, 565, or 568, as applicable.
- Signed powers of attorney: Each participating individual must authorize the business entity or corporation to include them in the group return. Keep these in the business's files; do not attach them to the return.
The signature area asks for the authorized signer's signature, title, date, telephone number, printed name, and business entity's name.
How to file
- Complete Form FTB 3864 for the annual group-return election.
- Have an authorized general partner, member-manager, corporate officer, or attorney-in-fact of the business entity or corporation sign it.
- Attach the completed, signed form to the group nonresident return, Form 540NR, and to the appropriate business entity return.
- Prepare Form 540NR as directed in FTB Pub. 1067, Guidelines for Filing a Group Form 540NR.
The business entity must file Form 100S, 565, or 568, as appropriate. A corporation must file Form 100 or 100S.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Leaving the election unsigned or failing to renew it annually. A completed, signed Form FTB 3864 must accompany the group return each year.
- Using a fiscal year for the group return. The group return must use a calendar year. For the 2025 group return, a fiscal-year business entity reports the individual's share of California source income from the entity's taxable year ending in 2025. A fiscal-year corporation reports directors' compensation received in 2025.
- Assuming an individual can change the election after filing. Once the group return is filed for the year, the individual's election is irrevocable.
- Attaching powers of attorney. Keep them in the business entity's or corporation's files instead.
- Overlooking the additional 1% tax. For participating individuals with more than $1 million in California taxable income, this tax applies to their entire California taxable income on the group return, not just the amount above $1 million. Combine income from all of an individual's group returns when checking the threshold.
Questions people ask
What tax rate applies to individuals on the group return?
Each included individual's California source income is taxed at the highest marginal rate of 12.3%.
Can someone with more than $1 million in California taxable income join the group return?
Yes. However, an additional 1% Behavioral Health Tax applies to their entire California taxable income included in group returns. If the person participates in multiple group returns, their combined California taxable income from those returns determines whether the threshold is exceeded. The business entity or corporation must find out whether the threshold is exceeded and report and pay the additional tax on its group return.
Can directors claim deductions or credits on the group return?
No. Directors are not allowed deductions or credits.
Who makes estimated tax payments for the group?
The business entity or corporation must make the group's estimated tax payments under its FEIN, as instructed in FTB Pub. 1067.