@ncabaloff wrote:
Sorry now I’m confused. Wouldn’t the end result be the below, after all the adjustments and credits?
75% of bonus is taxed in MA
25% of bonus is taxed in CA
Assuming I spend 3/4 of the year as resident of MA and 1/4 of year as resident in CA
California taxes all your world-wide income that you receive while a resident of California, regardless of where you performed the work. A bonus that you receive while a resident of California is 100% taxable in Californian even if it was mostly earned while you lived in another state.
California will tax 100% of the bonus. Massachusetts will tax 75% of the bonus. California should allow you to claim a credit for the tax paid in Massachusetts, but that is not the same as only taxing 25% of the bonus.
To make an oversimplified example.
Your bonus is $100,000, paid on 12/25/23 while you are a resident of CA. 75% of the bonus will be taxed in Massachusetts, according to the "Massachusetts source income" rules in their tax return instructions for part-year residents. Since MA's tax rate is 5%, you would pay 5% x 75% x $100,000 or $3750. 100% of the bonus is taxed in CA, at an approximate tax rate of 10%, or $10,000. CA should then give you a credit of $3750, leaving you with a net CA tax of $6250.
