MA resident, earned only 1099-MISC, $200k from MA and $100k from CA. For CA state, can I claim $50k SEP Plan deduction all from CA income, or am I limited to 1/3 is CA?

BostonGuy · ‎June 6, 2019

Zbucklyo · ‎June 6, 2019

I have a different take. I think you can only deduct proportionally based on the income earned in the state. And, as you are probably aware, MA doesn't allow a deduction at all, which will create a MA basis for the SEP. This appears to agree with the calculations outlined in the FTB publication.

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BostonGuy · ‎June 6, 2019

Thanks and I agree that the publication is clear - I have to pro-rate! And, yes Tax-achusetts gives no love.

DanielV01 · ‎June 6, 2019

It depends on your point of view. The way how California calculates tax is they pretend that all of your income is taxable in California, and then prorate the amount of tax based on the percentage of income earned in California. Because of this, California will allow you the entire deduction, but when the tax is prorated to the income, the effect will be as if your deduction were also prorated.

For a consideration of California's SEP deduction rules, please click on this link: (FTB Publication 1005). (A PDF will download; the SEP rules are on page 11).

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BostonGuy · ‎June 6, 2019

Thanks for the link! The publication for non-resident SEP calculation nailed it...CA pro-rates.

MA resident, earned only 1099-MISC, $200k from MA and $100k from CA. For CA state, can I claim $50k SEP Plan deduction all from CA income, or am I limited to 1/3 is CA?

State tax filing

State tax filing

State tax filing

State tax filing