California Capital Loss Carryover

[ilive4this]

My wife and I been living together in Missouri since marriage. This year, my wife took a 90 day travel contract in California where she worked and rented a house for 90 days. I believe this makes both of us nonresidents all year long as she was there only for a limited time and for a specific purpose.  

We have a federal return, a MO state return, and are working to file our CA nonresident state return. My question largely is just around the California Capital Loss Carryforward. We have $29k in capital losses on our federal return to carry forward from a prior year - can that go towards CA Capital Loss Carryforward to offset ordinary income? We can use it for federal and for Missouri, but It was not a loss related to California or income/loss from California assets, so I’m unsure if as nonresidents we should offset ordinary income by the $3k from that Carryforward.

We had approx 30k in CA income (just her job) and about 350k in total. My question ultimately becomes, we are taxed on that full 30k or can we offset it by the maximum allowance of 3k via the Carryforward?

[Vanessa A]

My wife and I been living together in Missouri since marriage. This year, my wife took a 90 day travel contract in California where she worked and rented a house for 90 days. I believe this makes both of us nonresidents all year long as she was there only for a limited time and for a specific purpose.  

Yes, you would be non residents of CA since you maintained a home in MO and it was a temporary situation for her to be there.

"We can use it for federal and for Missouri, but It was not a loss related to California or income/loss from California assets, so I’m unsure if as nonresidents we should offset ordinary income by the $3k from that"

No, you can not use a loss that had nothing to do with CA to offset her income earned in CA.  In order to use that loss to offset her income earned in CA it would have to had been realized while a resident of CA and since she was never a resident, only there temporarily, there would not be a loss to recognize. 

My question ultimately becomes, we are taxed on that full 30k or can we offset it by the maximum allowance of 3k via the Carryforward? Yes, you will be taxed on the full $30k she earned there minus any deductions she may be able to take directly related to her work. CA does not follow current federal law so if she was an employee and you itemize the CA return, expenses in excess of 2% of your CA AGI can be deducted.  Also, if she was a 1099 subcontractor, she would be able to deduct her rent and other expenses from her CA income. 

[ilive4this]

Thank you! Does this mean for California Capital Loss Carryover and AMT I should enter $0?

Additionally, for my MO state return where we are given a credit for taxes paid to other states (CA), TurboTax’s software asks if we earned all our money in CA; to which I say no, and say only $30K of our $350K was earned there. Of that 350k total, 250 was earned by me and 100 by my spouse. When I review the tax form for MO to get credit for taxes paid to other state (CA), it is computing whatever percentage is used to calculate our tax credit based on the $30k against my $250k; not the $30k against her $100k earned. And I can’t find a way to correct this as I think it should be calculated as a percent to her income. 

@Vanessa A Any help here would be hugely beneficial. 

[Vanessa A]

Yes for $0 for CA AMT and Capital Loss Carryover

For the state using your income instead of hers, would you be able to send me a diagnostic copy of your return so we can further investigate why it is not letting you apply it to both of your income?  You can do this by taking the following steps:

TurboTax Online

• Tools
• Tax Tools
• Share My File with Agent
• then note the token number and respond to me with the number

TurboTax Desktop

• Online
• Send Tax File to Agent
• Send
• Then respond with the token number to this message

The diagnostic copy does not include any of your personal info, it just includes numbers and forms so we can help solve the issue. 

[ilive4this]

I think I was able to resolve this in the tool. All good! Thank you!