Incorrect State Income

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I moved from CA to WA mid year some time ago and filed a CA part year return. However, the state income was incorrect on the w2, and I couldn’t get a corrected one. I just filed(just before the amendment deadline) a 540x/amended 540nr with the updated state income, documenting the move date with a utility bill and a moving van receipt. I included paystubs before and after the move date to calculate the correct CA income. However, I see that maybe I should have included a form 3525 to document the change. Will the franchise tax board reject the amendment, or just ask for the form or more information? Since I’m near the deadline it can’t be amended again,

M-MTaxAnswer

Level 15

No, you cannot deduct them, but due to a state tax reason rather than a federal one:

The Federal Side: You are correct that civilian moving deductions are permanently eliminated at the federal level.
The California Side: California explicitly does not conform to the federal ban and actually still allows an active state-level moving deduction via FTB Form 3913.
The Sourcing Catch: By established California tax case law, moving expenses are legally tied to your new job location (the forward attribution rule). Because your new office/telecommuting position is located entirely out-of-state in Washington, your new wages are not subject to California tax. Therefore, California will not allow a state deduction to offset non-California sourced income.

Summary Action Plan

Do not file another Form 540X to try and push Form 3525 through; submitting duplicate amendments can lock up your file in the system [S].
Log into your MyFTB account periodically [S]. If an agent decides they strictly require Form 3525 to complete the processing, they will issue a letter requesting it, and your prompt reply will protect your original filing date.

M-MTax

Level 15

The California Franchise Tax Board (FTB) will not immediately reject your amended return just because Form 3525 is missing. Instead, they will process the paperwork you sent and will contact you directly if they need additional formal documentation.

Because you included a paper trail (paystubs, moving receipts, and utility bills), the FTB has the mathematical and factual proof necessary to cross-reference your calculation.

M-MTax

Level 15

While you wait for the state to review your return, you can protect yourself by taking these steps:

Keep Your Copies Ready: Print out a blank copy of Form FTB 3525 right now. Fill it out completely using the exact numbers from the paystubs you already submitted so it is ready to mail the moment a notice arrives.
Monitor "MyFTB": Create or log into your account via the California FTB Portal. This tracks the live status of your amended return and highlights any notices sent to you weeks before they arrive via physical mail.
Do Not File Another 540X: Filing a duplicate amendment can trigger processing flags, cause system errors, and severely delay your calculations.

StevehofwaAuthor

Level 5

Thanks. I documented my move with a cable bill on 5/22, and then a moving van receipt from 5/25(when all the stuff was picked up), so I said 5/25 was my last day. Just wanted to avoid a check stub dated 5/28. I believe the income is counted is you receive(that’s what the 540 instructions say) it, not work it. On another topic, can moving expenses be deducted? Admittedly this move changed me from an onsite to offsite employee, which was my choice, with no change in job otherwise. I know you can’t deduct on federal.

StevehofwaAuthor

Level 5

I think the moving might not be deductible since the new location is not in CA, but not sure.

M-MTaxAnswer

Level 15

No, you cannot deduct them, but due to a state tax reason rather than a federal one:

The Federal Side: You are correct that civilian moving deductions are permanently eliminated at the federal level.
The California Side: California explicitly does not conform to the federal ban and actually still allows an active state-level moving deduction via FTB Form 3913.
The Sourcing Catch: By established California tax case law, moving expenses are legally tied to your new job location (the forward attribution rule). Because your new office/telecommuting position is located entirely out-of-state in Washington, your new wages are not subject to California tax. Therefore, California will not allow a state deduction to offset non-California sourced income.

Summary Action Plan

Do not file another Form 540X to try and push Form 3525 through; submitting duplicate amendments can lock up your file in the system [S].
Log into your MyFTB account periodically [S]. If an agent decides they strictly require Form 3525 to complete the processing, they will issue a letter requesting it, and your prompt reply will protect your original filing date.