In June of 2019 I moved from HI to CA. The sale of my HI house was underway and sold in July. I used the proceeds to buy a CA home right away. So far it looks like I'm required to pay capital gains to both HI and CA as well as Fed. It appears I owe, let's say, $21,000 to Feds, $12,200 to HI, and another $13,000 to CA. Is this right? I'm stunned! This is after the $250k exclusion on the profits from the sale. Most income amounts were split by the percentage of time spent in each State, 42% and 58%, and I understand HI wants full capital gains on the sale of the property as it was located in that State. But CA also wants a similar amount because I earned the income while residing in CA. I've been retired a few years with limited fixed income, and the home sale was meant to be my cushion for a while. Now it feels like I'm being double-charged and will have to make installment payments for nearly a year to pay this off. Please confirm if I'm understanding this correctly. Thank you.
You should be receiving a credit on your California return for the taxes paid in Hawaii.
The credit will be reported on Schedule S in your California part-year resident return.
You can do this by going into the state interview section of the program.
- Select California
- Select Credit & taxes
- Continue through the screens until you see the screen titled Take a look at California credits and taxes
- Under the section titled Personal, home, and family tax credits, select Other state tax credits
- You will be able to enter the income earned that was allocable to Hawaii and the amount of taxes paid to Hawaii on this income.
This will allow you to take a credit on your California return so you are not taxed on the same income twice.
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Thank you so much for the help! That saves me thousands of dollars and I never would've found it on my own. Seems odd that it's hidden - I would think it would come up automatically, with a list of queries to determine if it's appropriate, since the program knows when one is reporting a home sale, has moved, and is filing tax returns for both States. Again, thank you!