Hello there - I moved from California to Arizona at the end of March 2025. I am now working on my state returns and have a couple questions: Trying to file itemized deductions for CA to claim medical expense. Looks like TurboTax is telling me I dont get to itemize because my expenses are not more than 7.5% if my FEDERAL AGI. Why do they use the FEDERAL AGI? Seems to me a CA AGI should be used to determine if something is deductible in CA, no?I got a federal credit for installing energy efficient blinds. I dont see how to enter that in the CA returns. Does CA not accept that credit?For "taxes paid" section of the 540 CA, the state and local income tax is no allowed for CA. However, about half of those state taxes were paid in AZ, not CA. Why is the AZ state taxes not allowed?Finally, it looks like the way CA figures what rate to tax you is to use your total AGI (Federal). That does not seem fair. Am I looking at this correctly? Thank you in advance for your help.

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Question

California NR questions

Forum|Forum|6 months ago
March 12, 2026
1 reply
393 views

Hello there - I moved from California to Arizona at the end of March 2025. I am now working on my state returns and have a couple questions:

Trying to file itemized deductions for CA to claim medical expense. Looks like TurboTax is telling me I dont get to itemize because my expenses are not more than 7.5% if my FEDERAL AGI. Why do they use the FEDERAL AGI? Seems to me a CA AGI should be used to determine if something is deductible in CA, no?
I got a federal credit for installing energy efficient blinds. I dont see how to enter that in the CA returns. Does CA not accept that credit?
For "taxes paid" section of the 540 CA, the state and local income tax is no allowed for CA. However, about half of those state taxes were paid in AZ, not CA. Why is the AZ state taxes not allowed?
Finally, it looks like the way CA figures what rate to tax you is to use your total AGI (Federal). That does not seem fair. Am I looking at this correctly?

Thank you in advance for your help.

MaryK4

Level 15

1. California uses the federal rules to deduct medical and dental expenses, so the deduction is limited to the extent they exceed 7.5% of your federal AGI. (FTB Deductions Guide)

2. California does not conform to the newer federal energy incentives. (Summary of Federal Income Tax Changes)

3. You cannot deduct state income taxes (CA or AZ) on your California itemized deductions. If any of the California income is also taxed by Arizona, you can claim a credit for the taxes paid to California on your Arizona income tax return- but this is ONLY for income double taxed at the state level. (FTB Schedule CA (540) Instructions, FTB Schedule S Instructions )

4. California has a progressive taxation system. California determines your tax rate based on your total worldwide income (Federal AGI) to establish which bracket you fall into. That tax rate is then applied to your California income. (FTB Publication 1100)

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