Moving from CA to NC in September 2021

I am moving from CA to NC in Sept and will continue to work for a CA based employer remotely. At the moment   it's agreed I will not need to go back & forth between the two states.  Will I need to still pay CA income tax and how do I prepare for 2021 Tax returns having moved mid-year?

AndreaD_CPA
Expert Alumni

Get your taxes done using TurboTax

You will need to file part-year resident returns in both California and North Carolina for 2021.

 

As a part-year resident of California, you pay tax on:

  • All worldwide income received while a California resident
  • Income from California sources while you were a nonresident

As a part-year resident of North Carolina, you will use Form D-400 Schedule PN to determine the percentage of total gross income from all sources that is subject to North Carolina tax.

 

You will be taxed by both states for the income you earned while living in North Carolina but working for a California company; however, you will be able to take a credit on your North Carolina tax return for taxes paid to California on the income that is taxed in both states.  

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I need clarification please -- will I pay tax at the same rate as a CA non-resident as I did as a resident?  Is it worthwhile to take a higher deduction on W-4 to compensate for this?  Does the fact that I will likely not be physically present in CA play a role in how the taxes is calculated?

AndreaD_CPA
Expert Alumni

Get your taxes done using TurboTax

Your tax rate in California will be the same whether you are a full-year resident, part-year resident, or nonresident and will be dependent on the amount of your taxable income.  

 

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