State tax filing
@ErnieS0 There is one more question about the third stimulus amount in the federal tax return when is asked by TurboTax software. My wife is on H1B for the whole year of 2021 and based on the Substantial Presence Test, she is a resident alien, but she did not receive the third stimulus amount. And as mentioned in my post, we are electing to treat me, the non-resident spouse, as a resident for tax purposes. Then will my wife be eligible for the Recovery Rebate Credit? And will I be ineligible for the Recovery Rebate Credit when treating me as a resident alien for tax purposes?
By the way, we find the Schedule CA Adj form in TurboTax software, and by following TurboTax's question in CA tax return filing, the TurboTax asks us to enter the amount of our exempted tax treaty in our federal tax return, and the Schedule CA Adj has generated automatically by TurboTax like the following image. The software automatically fills the exempted tax treaty amount in Line 4 as Additions (Column C) in Schedule CA Adj. You mentioned Line 16a in your previous reply. So is it acceptable to fill it in Line 4 of Schedule CA Adj?
And after doing this, we see that the tax treaty exemption amount is automatically added back by TurboTax in Schedule CA (540NR), Part II, Section A, line 1, column C, which we think is now correct based on Publication 1031. And the CA Amounts in line 1 Column E should not change since the Additions in line 1 Column C are non-CA source income. Is it the correct operation as you mentioned, to make an adjustment on Column E?
And if we do not want to claim a tax credit for the joint CA state return and separate IL state return to avoid manually adding anything, can we choose not to claim them?
