topic Re: State Filing in State tax filing

State Filing

minx — Tue, 04 May 2021 18:44:38 GMT

If I lived in Arizona all of 2020 but worked in California for the entire year, do I have to file Arizona State Tas?

Re: State Filing

DanielV01 — Tue, 04 May 2021 18:57:57 GMT

Yes. You actually will file both an Arizona resident return and a California nonresident return. Arizona and California have a hybrid reciprocal arrangement called a reverse credit. In this arrangement, you pay all of your state tax to Arizona. California will give you a credit for the taxes you pay to Arizona. (It's called a reverse credit, because normally it's the other way around. Normally your resident state gives you a credit for the taxes you pay to the non-resident state).

Prepare the Arizona return first, and when you get to the California return, pay attention to the screen that talks about Credit for taxes paid to another state. This will apply to you because of the situation I described above. If not pre-populated, enter all of the income you earned in California in that box and the amount of tax you paid to Arizona on that income. This will usually be the amount of Arizona tax withheld, plus any additional amount you must pay Arizona or minus any state tax refund from Arizona.

Re: State Filing

minx — Fri, 07 May 2021 16:40:22 GMT

Thank you for your reply. All of my income was made and taxes paid to California. There was no tax paid to Arizona so I'm not sure I understand what you said about entering amount paid to Arizona.

Re: State Filing

minx — Fri, 07 May 2021 16:53:08 GMT

Thank you. Nevermind, I figured it out

Re: State Filing

DanielV01 — Fri, 07 May 2021 16:55:27 GMT

You will need to prepare the Arizona return first. When you do, Arizona will say that you owe an amount to them. If you didn't have any taxes withheld for Arizona, then you will enter this number in the taxes paid to another state section of the California return. This amount will subtract from what you would otherwise pay to California, and you will get additional California refund as a result, but you will have to pay much of this refund to Arizona to cover your tax due.

There is a way to adjust this. Please see the following article, and look for the form you can file with your California employer so they are withholding Arizona versus California tax: Which states have reciprocal agreements?

Re: State Filing

DanielV01 — Fri, 07 May 2021 16:56:19 GMT

I am glad you figured this out, @minx, but I encourage you to look at the Help Article anyways to have a simpler future situation.

Re: State Filing

minx — Fri, 07 May 2021 17:17:04 GMT

Thank you I will