CA taxes the entire income since you are a CA resident. If you have any tax due to PA, then CA will give you a credit. The PA return is only required if you have taxable income. If your PA return shows no tax due, then you are not required to file it.
Please carefully follow these directions to prepare the states in a special order. You may need to delete both states and begin again.
- First, prepare your non-resident PA return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
- Then prepare your resident state CA return and it will generate a credit for your income already being taxed in the non-resident state.
- The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state, if they have a higher tax rate.
It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.
Related: Why does tax-free income from Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas...
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