I received two 1099-INTs for a Trust.
The first lists "WA" instead of "CA" in box 15 (State) and the WA state code in box 15. Zero state taxes were withheld (box 17).
The second does not even have boxes 15, 16, or 17 on the form! This makes it seem like these boxes don't even matter...
Does the first bank need to issue me a Corrected 1099-INT since they listed the wrong state?
And if they do this, is it automatically sent to the IRS and California FTB as well? (Is that necessary?)
Thank you!
No, it is not necessary to get a corrected 1099-Int due to WA vice CA being noted in box 15. First, there was not withholding so you can actually leave the 15, 16 and17 blank just like the 2nd 1099-Int.
Next, WA does not tax interest earnings anyhow.
Finally, assuming you are the trustee and reside in CA, after entering the income in the federal interview the amounts will automatically flow to the resident state return interview; no matter what is entered in box 15.
If there were withholding or the income was taxable in another state you would've needed to create a non-resident state return for that state and allocate the portion of income that belongs in the non-resident state. Your resident state will still tax the income but offer a credit for taxes paid to another state.
@DMarkM1 thank you! Just to clarify, when you said this:
"If there were withholding or the income was taxable in another state you would've needed to create a non-resident state return for that state and allocate the portion of income that belongs in the non-resident state. Your resident state will still tax the income but offer a credit for taxes paid to another state."
Did you mean, if there was withholding AND the income was taxable in another state?
Because the interest income is definitely taxable by CA, but as I mentioned nothing was withheld.
Thanks again!!
Yes, I wrote correctly. If there were withholding or the income was taxable by another state you would need to create/file a nonresident return for that state. CA as your resident state is going tax in either/all cases.
What about the other way around. I'm a WA state resident and received a 1099-INT with the wrong address of CA.
As a California nonresident, you would pay tax on your taxable income from California sources. See this California webpage.
Sourced income includes, but is not limited to:
Interest and dividend income would not be taxable for a nonresident unless it had a business or taxable situs in California (R&TC §17952).