No, this is not correct. The credit should be calculated using different numbers. Since MA tax rates are lower than CA, when calculated correctly, the entire $35k you owe to Massachusetts for this sale should be wiped out. You will need to override the TurboTax calculation and manually enter the correct numbers.
To override a calculation, you will need to use TurboTax Desktop:
- Go to the Credit for Income Taxes Paid to Other Jurisdictions Worksheet in your MA return (Under forms in my return, it appears as Tax Credit Wks)
- For a credit for capital gains from California, Line 2 on this worksheet should be equal to MA Sch D Line 13.
- The Line 4 amount on this worksheet should be the same as MA Form 1 Line 24.
For how I came up with these line numbers, see the MA-1 Instructions for Line 30 on Page 14. The rest should calculate correctly, and the entire $35,000 should be credited. To override amounts on this worksheet, you will need to right-click on the Line and select Override. Then enter the appropriate amount.
Overriding entries will mean that you have to mail in the Massachusetts state return. It also invalidates TurboTax's accuracy guarantee.
