State tax filing

 @jclizzy  No - this guy is wrong, too @RobertB4444  please stop posting incorrect information to these unfortunate taxpayers who are paying for your services. Again, I am not sure what defines an "Expert" here but you clearly do not understand the complexities of this situation. This is not a general question of whether CA offers a credit for income derived from New York.....that is a simple yes. This has to do with remote workers in CA working for an employer with NO connection to CA / that are based in New York. This is commonly known as the "Convenience Tax". 

If you keep up with current events, you would be aware of the issues with NY's 'Convenience Tax'. New Jersey & Connecticut are currently encouraging Taxpayers to bring Ny to court and are offering them a 50% income tax credit if they win! [Sources: Bloomberg - NY under Attack from NJ/CT || Bloomberg - NY 'Convenience on Employer' Stands on Wobbly Ground]

You copy pasted an excerpt from the instructions to Schedule S and just stopped midway thru wihtout getting to the detail that actual matters/explains - you need to keep reading.......

H. Income from Sources Within the Other State

Generally, residents of California may claim a credit for net income taxes imposed by and paid to another state only on income which has a source within the other state.** 

For this purpose, California’s nonresident sourcing principles apply even though the results may be contrary to the other states’ principles. The following describes the sources of various types of income pursuant to California law:

• Compensation for services rendered by employees has a source where the services are performed.
• Compensation for services rendered by independent contractors has a source where the benefit of the services are received.
• Income from tangible personal property and real estate has a source where the property is located.
• Income from intangible personal property (such as interest and dividends) generally has a source where the owner resides.
• Business income has a source where the benefit of the services are received.

To summarize that for you - California sources W-2 Wages where @jclizzy performs them - WHICH IS IN CALIFORNIA. New York does not conform to this treatment of sourcing.

Section 601(e) of the New York State Tax Law imposes a personal income tax on a nonresident individual’s taxable income that is derived from New York sources.

In determining the New York source income of a nonresident employee, section132.18(a) of the personal income tax regulations provides, in pertinent part: If a nonresident employee performs services for his employer both within and without New York State, his income derived from New York State sources
includes that proportion of his total compensation for services rendered as an employee which the total number of working days employed within New York State bears to the total number of working days  employed both within and without New York State. . . . However, any allowance claimed for days worked outside New York State must be based upon the performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of-state duties in the service of his employer.

[ This is the convenience of the employer test.]

NY TAX MEMO: https://www.tax.ny.gov/pdf/memos/income/m06_5i.pdf

Again - this is a well known double-taxation issue and colloquially referred to as the 'Convenience Tax'. 

@jclizzy feel free to reach out to me if you have any questions [PII removed]