Yes. Because of the agreement between AZ and CA, instead of an AZ resident getting a state tax credit for taxes paid on a CA nonresident state income tax return, you need to paid the taxes on this CA-sourced income in AZ and will be allowed an AZ tax credit on your CA nonresident state income tax return. So this means that you will get a refund of your CA withholdings but you will need to pay taxes in AZ on this CA source income.
Please see AZ
- Out of State Tax Credit Form for more information.
