Why was my California Schedule S rejected when we had non-resident income in CA but are residents of AZ where all of our income is taxes. We're being double taxed!!!

Forum|Forum|7 years ago
June 4, 2019
3 replies
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AZ does not allow a credit for tax paid to CA, for nonresidents of CA who are AZ residents.. You would have to take the Other State Tax Credit on AC instead of AZ. This situation is not typical of most states, but AZ has rules about states for which you cannot take this credit in AZ and CA is one of them.

7:09 pm 3/16

Edited to correct

Anonymous

Answer

7:09 pm 3/16

Edited to correct

wvmrem989Author

Level 2

This is the answer I received: "CA does not allow a credit for tax paid to AZ, among others. You would have to take the Other State Tax Credit on AZ instead of CA. This situation is not typical of most states, but CA has rules about states for which you cannot take this credit in Ca and AZ is one of them".

If this is correct, why did turbotax complete the California form Schedule S when computing my tax obligation to CA? Furthermore, if the above answer is actually correct, why didn't turbotax compute a credit to my AZ tax for taxes paid to CA? I'm still being taxed twice for the same income. I'm beginning to think that turbotax does not really have much of a handle on how to compute a pretty simple tax return where income is earned in more than one state where one is a non-resident.

Anonymous

I am so sorry that I read this in reverse in your original question.. CA does allow you to take the credit, if you are a nonresident of CA and a resident of AZ. It is AZ that does not allow the credit for tax paid in CA. I will correct my answer. What do you mean by Schedule S is rejected? Do you mean CA rejected your state returrn, with what message?

mryflyguy

Level 2

I'm a CA resident as well and just sold a property that resulted in a 593-C withholding tax from escrow. I chatted with the FTB this morning and think I understand - I need to file a CA 540NR (in addition to AZ) with just the escrow withholding (as a tax payment) and reduce the amount by the amount paid in AZ - this done on CA Schedule S form. Is this correct? when I purchase the additional state (CA in addition to AZ), will Turbotax add Schedule s calculate the amount automatically?