No, it is not an error, but you need to go through the MA and tell TurboTax which income belongs to MA. You should only be allocating her MA wages to MA, everything else is CA-sourced. TurboTax will automatically enter all your income on your resident return. But you have to tell TurboTax what income belongs on the nonresident return. Make sure that you do in fact need the nonresident return - Did she work in MA or was she remote, at whose convenience?
You need a CA resident return and an MA nonresident return (assuming she has MA-sourced income). You need to make sure your personal information is set up correctly. How to prepare a nonresident return. Go all the way through the nonresident MA return before you complete your resident return. When you go through the MA return, you only want to allocate the MA-sourced income to MA. On the MA return, do not allocate any capital gains or CA income to that return, only her MA income.
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