Hello
For 2017 we filed 'married filing jointly'. We are both primary residents of CA but my spouse had temporarily shifted residence for 6 months in IL and worked there.
We had filed 'Resident tax return' for CA and non-resident return for IL
In CA return, I failed to mention IL income/taxes paid probably thinking I dont need pay double taxes
Now I have an audit letter from CA which cites discrepancy between federal and CA reported federal income and asking to pay taxes on difference amount. I think I made a mistake in CA return not including IL income.
1) We are asked to either pay excess taxes or file protest. Thinking what I should do?
Ideally it seems I should have reported IL income on CA return and then claimed 'out of state income' tax credit because Ive also already paid taxes in IL ? Can I refile my CA state returns?
2) Actually should we have filed in both states in non-resident status?
