I am full time CA resident, have a rental property in AZ, how do I enter the tax I paid to AZ on rental profit (for 1st time) as credit on my California State tax return?

[ciwawa321]

We had rental loss in past years.  2017 all carryover loss was used.  2018 was the first year the rental property turned a profit.  I understand I can take the tax paid to Arizona State as credit on California State Tax Return, really need to know where to enter the credit on California state forms.  Thank you.

[Cindy0H]

Unfortunately, California residents cannot claim this credit if it's for a tax you paid to Arizona. See screenshot.

If you have other questions about this, ask in the comment section below.

[ciwawa321]

I am sorry, but I don't see the screenshot, can you tell me where to find it?  Thanks.

[pk]

CA does allow credit for taxes  paid to another state  -- where it does not allow credit is for "reverse credit "  states/ situations.  AZ is one of the states does allow credit to CA resident/entities when AZ allows credit.

In your particular case, I believe, AZ is not giving you credit on income earned in AZ because you will be taxed on that income in CA.   You are paying taxes to AZ  on your non-resident AZ return, right?

 In such a case , you do your federal return first then do the non-resident state return ( AZ) and thereafter do the  resident State ( CA ) --- TurboTax  will pull the  AZ taxes paid/incurred on to the CA form and give you the credit.

Do you need more specific help  or is this sufficient

[ciwawa321]

Thank you, Super PK, for confirming that so promptly, really appreciate it.  You recommended doing AZ tax first then CA tax, does it matter which one first though?  I have always done my CA tax first because of my residency. 

[pk]

 If you want TurboTax to automatically  do the needful ( i.e. to recognize the credit for taxes paid to a non-resident state ) then the easiest way is to do the  Non-Resident State first and follow that with the resident state.  I That is the standard and recommended way.   If you have already prepared the state returns, you may have to delete both the returns and re do them.  I don't know for sure but it is possible that if you delete the  CA return and do it again,  TurboTax might pick up the  credits from the AZ and you would be OK  Try this  first before  taking the more drastic step of deleting both and redoing everything.

I cant see which version of TurboTax you are using  ( ON-line Vs. downloaded/CD version.  If the latter , because you have the forms mode available, it is possible to make the changes on the actual worksheets  -- thus  avoiding the "delete & re-do " scenario.

Good luck

[ciwawa321]

Thank you, you are very kind.  I will try your way.