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mwt642
New Member

I have an out of state rental property. It is showing up on my state tax return. Should I remove it? How do I remove it?

I am in the military.
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1 Best answer

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ToddL
New Member

I have an out of state rental property. It is showing up on my state tax return. Should I remove it? How do I remove it?

As a general rule, active-duty military (and their spouses) file a resident tax return in their state of legal residence when stationed on PCS orders outside that state.They are also taxed on whatever income they have, no matter where it comes from (many exempt military pay from taxable income).

California takes a different and more beneficial approach. An individual domiciled in California when entering the military is considered to be a nonresident while stationed outside California on PCS orders.

How does this affect their taxes?

All income received or earned prior to departure is subject to tax by California.  

After departure, only income from California sources is subject to tax by California.

Nonresidents are generally not taxed by California on income from intangibles, such as dividends from stocks or interest from bonds or bank accounts. 

You have to answer the Personal Interview questions carefully, though. You would still identify yourself as a resident of California, and answer "No" when asked if you "Lived in another state in 2016?" You would, however, answer "Yes" when asked if you "Earned money in another state in 2016?" That would be the rental income.

The CA state tax interview should recommend that you file Resident return, but give you the choice of changing your filing status to Non-resident.

See D on page 3 of the following: https://www.ftb.ca.gov/forms/2016/16_1032.pdf

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3 Replies
ToddL
New Member

I have an out of state rental property. It is showing up on my state tax return. Should I remove it? How do I remove it?

Where is the property and what is your home of record state (i.e. where you are filing a return)?
mwt642
New Member

I have an out of state rental property. It is showing up on my state tax return. Should I remove it? How do I remove it?

Property is in Washington where I am stationed. Home of record is California.
ToddL
New Member

I have an out of state rental property. It is showing up on my state tax return. Should I remove it? How do I remove it?

As a general rule, active-duty military (and their spouses) file a resident tax return in their state of legal residence when stationed on PCS orders outside that state.They are also taxed on whatever income they have, no matter where it comes from (many exempt military pay from taxable income).

California takes a different and more beneficial approach. An individual domiciled in California when entering the military is considered to be a nonresident while stationed outside California on PCS orders.

How does this affect their taxes?

All income received or earned prior to departure is subject to tax by California.  

After departure, only income from California sources is subject to tax by California.

Nonresidents are generally not taxed by California on income from intangibles, such as dividends from stocks or interest from bonds or bank accounts. 

You have to answer the Personal Interview questions carefully, though. You would still identify yourself as a resident of California, and answer "No" when asked if you "Lived in another state in 2016?" You would, however, answer "Yes" when asked if you "Earned money in another state in 2016?" That would be the rental income.

The CA state tax interview should recommend that you file Resident return, but give you the choice of changing your filing status to Non-resident.

See D on page 3 of the following: https://www.ftb.ca.gov/forms/2016/16_1032.pdf

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