Yes, TurboTax does handle credits for taxes paid to states other than your resident state. Having said that. AZ and CA have a reciprocity tax agreement. CA tax should not be withheld for AZ residents. You only need to file and pay taxes in AZ.
Since your employer withheld CA taxes you need to file a CA non-resident tax return and claim zero CA source income to get those CA taxes refunded.
Further, you need to go quickly to your employer and have them stop withholding for CA and start for AZ as an AZ resident. If CA withholding has already occurred in 2024 you will need to follow the steps below next year as well. Ultimately once only AZ taxes are withheld, you only need to file in AZ.
In the "My Info" section in TurboTax:
- Scroll down to "Other State Income"
- Answer "Yes" to the question "Did You earn income in another state?"
- Indicate CA as that state
This will generate the CA non-resident return.
After entering your income in the federal "Wages & Income" section, you can click the "State Return" in the left hand menu and "Start" your CA non-resident return.
In the CA state return interview during the "Income" set of questions, all of you income will have transferred in so you will allocate zero "W2 Wages" to CA (and zero for all other categories if applicable). This will refund all CA taxes.
As an AZ resident all of your income will be reported in the AZ interview (transferred automatically from your Federal interview).
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
