I'm currently a CA resident and I had some income from KS this year. So I filed my KS tax as non-resident and I knew I could claim other state tax credit on my CA tax return. Now I'm a bit lost when filling out California Schedule S form.
Assume I earned 95,000 from CA and 5,000 from KS. So my total income for CA tax return is 100,000. So what's Double-taxed income taxable by California? (100,000 or just 5,000)
If answer for above question is 5000 then what's Double-taxed income taxable by KS? (100,000 or again 5000).
The reason why I'm confused is the taxable income on my KS tax return actually is 100,000 instead of 5000. Based on 100,000 income, I need to pay 4000 to KS. Since I'm a non-resident, so my final KS tax liability is 4000*(5000/100,000) = 200
So I think my double taxed income should be 100,000 for both CA and KS, though KS did apply percentage 4000/100,000 on KS tax return.
Is my understanding right?
The $95,000 is not double-taxed, because it is taxed only by CA. It is not taxed by KS.
The $5,000 you earned in KS is taxed by both states.
$5000 is your double-taxed income.
You can take a credit on your CA return for the taxes paid to KS, but you cannot take a credit on your KS return for the taxes paid to CA.
So if my double-taxed income is 5000, the CA Schedule S form asks the following information:
7 Income tax liability paid to other state (use state’s abbreviation) See instructions ................... $200
8 Double-taxed income taxable by other state. Enter the amount from Part I, line 1, column (c) ................. 5000
9 Adjusted gross income taxable by other state. See instructions.............100,000
Line 9 is where I'm lost. The KS tax return shows adjusted gross income taxable by KS is 100,000 instead of 5000. If above numbers are correct, my CA credit is 200*5000/100000 = 10. I thought KS taxed me $200 on income 5000. The credit doesn't make much sense. Did I misunderstand Adjusted gross income taxable by KS?
You must do the state returns in the proper sequence in order for TT to calculate the credit correctly. Complete the non-resident state return first. Then do your home state return. I think you may have done them in the reverse order.
Yes, I did my CA return first. The TT started my state tax return for CA by default. I did KS tax return by myself since it's very simple.
BTW, I'm using TT Deluxe version. How can I use it for KS tax return.
To use TT for your KS return, go to the personal info section and indicate that you had Other State Income from KS. That will prompt TT to generate a non-resident KS return. Then do the KS return first, followed by your CA return.
Thanks for your patience and time.
After I changed the personal info the TT showed "Let us finish your taxes for just $44.99 per state". Does this mean I need to pay 2*44.99 since I have two state returns?