California - Non-residency status wrongly filled by TurboTax

[arun]

Hi, In 2019, I moved out of cali to foreign country in Feb. But i am still trying to file tax or california as a part-resident (or non-resident)

When I try to fill it in questionnare from turbox , turbotax asks me a question "Were you non-resident of cali for all of 2019" - I say NO because i was in california for 35 days.

But turbotax is automatically changed it to Yes :( and claiming me as non-resident for complete year. This is reflected in form 540NR. This is very confusing. Can this create a problem? Need urgent help !!

[arun]

Bumping this up to get help from TurboTax experts. Thanks !!

[SusanY1]

This is the correct form.  Form 540NR is the "California Nonresident or Part-Year Resident Income Tax Return" and is the appropriate form for any taxpayer who did not reside within the state, or is otherwise deemed a full-year resident for the entire year.

[arun]

Thanks @SusanY1  for clarification. 

A)

Here is my main issue with the way TurboTax has filled in the following 2 questions in 540NR 

4) I became a CA nonresident (enter new state of residence and date (mm/dd/yyyy) of move). / / / /

5) I was a CA nonresident the entire year (enter state of residence )

Since i was resident for the first 34 days of 2019, I expect Turbotax to fill in question for 4 specifying my date of move. Instead it leaves it BLANK and fills in answer to question 5. So this is going to  convey wrong info to IRS stating i was non-resident for the entire 2019 year (though i stayed in california for 34 days). Should i fix this ? if so, how? 

B)

Note that my domicile has been changed to foreign country in 2019. Not sure if that's the reason for mentioning me as non-resident for the entire 2019 year. pls share ur thoughts. 

Thanks @SusanY1   for timely help.

[TomD8]

If you literally moved to the foreign country - meaning you abandoned your domicile (your main, permanent home) in CA and established a new domicile in the foreign country, then for tax purposes you are are part-year resident of CA.  You became a resident of the foreign country, and ceased being a resident of CA, on the day you began living in your new domicile in the other country.  You have to enter that date into TurboTax; TurboTax has no other way of knowing that information.

On the other hand, if you kept your CA domicile, and you are living in the foreign country on a temporary or transient basis, for tax purposes you would remain a full-year resident of CA for 2019.  

You'll find all of CA's rules on residency in this reference:

https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf

[arun]

Thanks  @TomD8 for the details.

I expected TurboTax to treat me as part-year resident.

I answered the TurboTax state-tax questionnaire accordingly.

For the question - "Were u non-resident for complete 2019". I answered No.  I even mentioned that i was out of state after 34 days (afaik, It did  not provide me a option to enter the date of my move for state returns)

But somehow Turbotax is NOT transferring this info properly to 540NR. :(

I have no way to correct the info in the generated 540NR.

[TomD8]

In the personal info section of TT, make sure you selected "Foreign or US Possession" as your State of Residence.  Answer Yes to living in another state, and select CA.  For the date, enter the date you began living in your new foreign home.

[arun]

Thanks @TomD8  for this immense help.

After I made this change (esp specifiying that i moved out to foreign country from CA in the TT personal info section), it has helped fix lot of issues.

  a) I am considered part-year resident in california tax return

b) my date of move shows in lot of worksheets.

Thanks a bunch for helping me avoid this mistake.

But the original issue i mentioned in the first post is still there :(.

In 540NR (Schedule CA) , for the following question, TT is leaving it blank rather than marking my date of move.  "4. I became a CA nonresident (enter new state of residence and date (mm/dd/yyyy) of move)"

I will try to play around a little bit more to find a solution.

Thanks again !!

[arun]

Just for reference: here is another discussion about the  same problem

https://ttlc.intuit.com/community/state-taxes/discussion/california-ca-sche[product key removed]/01/...

[d7g]

Has anyone found a solution for this? I am facing the same issue for 2021 taxes

[onesmallspeck]

Hi,

Was this eventually resolved? I am filing my taxes currently and see the same bug. Schedule 540NR isn't filled completely.

i.e this is left blank, even though I have specified I have moved to a different country in 2023.

I became a CA nonresident (enter new state of residence and date (mm/dd/yyyy) of move)

[MonikaK1]

If you were a part-year resident of California in 2023, you should file a part-year resident California return.

As a part-year resident, you pay tax on:

• All worldwide income received while a California resident
• Income from California sources while you were a nonresident

See this California webpage for more information.

TurboTax should complete the correct forms, depending on your entries. The California interview allows you to make adjustments for income that shouldn't be taxed on your California return.

[onesmallspeck]

Thank you for your response. I am filing as a part year resident for 2023. While Turbo Tax computed that correctly, it didn't fill form Schedule 540 NR completely (as others have said in this thread).

There is no way for me to manually override and fill it. And it seems it has been a issue for multiple years now.

[MonikaK1]

Please clarify what exactly is missing from your California state return in TurboTax.

In order for us to troubleshoot this issue, you can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Desktop users:

1. From the black bar at the top of your screen, select Online
2. Click Send Tax File to Agent
3. Click Send on the message that pops up
4. TurboTax will create a "sanitized" copy of your return information with no personal info
5. Post the 7-digit token number here in this thread

Here are the instructions for TurboTax Online users: 

Go to the black panel on the left side of your program and select Tax Tools. 

1. Then select Tools below Tax Tools. 
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent. 
4. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
5. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to review your file to see what you are seeing, and we can determine what is going on in your return and provide you with a suggested resolution here in this thread.

[onesmallspeck]

Thank you for the instructions. Here is the token number: 1231501.

Also, here is just the California questionnaire answers and the resultant value in the generated form which I believe is incorrect:

Here are the questions I answered to determine residency status for California state returns.

1. Joint Residency Status The Same? No

<Same answers for both of us for the below questions>

2. a. Did you become a California resident during 2023? No

2. b. Did you become a California nonresident during 2023? Yes

2. c. Were you a California nonresident during all of 2023? No

3. Where were you domiciled? Foreign country

4.a. Number of days you spent in California for any purpose? 354 

4.b. Did you own a property or home in California? No

5.a. Were you a California resident before 2023? Yes

5.b. Did you enter California before 2023? Yes

5.c. Did you leave California before 2023? No

6. Period of California Residency Before 2023? Me: 02-15-2016 to12-31-2022, Partner: 11-23-2019 to 12-31-2022

I also have in My Info entered the following:

1. State of residence (on December 31, 2023): Foreign Country

2. Checked the box: I lived in another State in 2023. 

3. Selected California with the date as 12/22/2023.

After this, in the generated Schedule 540 NR form

the line 

"I became a CA nonresident (enter new state of residence and date (mm/dd/yyyy) of move)" is blank