California resident, Arizona income

[Becky B]

I am a California resident.  I earned income in California and in Arizona.  I had no state taxes withheld from my Arizona paychecks.   My Arizona return shows taxes owed for the income reported in Arizona.  All my income from both California and Arizona is reported and taxes owed in California, too. I do not see a credit on my California return for taxes that I am having to pay to Arizona on my return. How can I claim that credit so I'm not paying income tax in both states?

[MaryK4 · Accepted solution]

The general rule is that you complete your nonresident state first to determine the credit foe taxes paid to another state.  One exception is a "reverse credit" state, which is exactly the situation you have.

Generally, residents of California may claim a credit only if the income taxed by the other state has a source within the other state under California law.  No credit is allowed if the other state allows California residents a credit for net income taxes paid to California.

You will want to go back through Arizona and look for the Credit for taxes paid to another state.  (You should be able just to go back through, if you cannot find it, delete the Arizona return and start it again.)

[Becky B]

Thank you MaryK. I did find where to apply the credit in the Arizona return.  It still shows I have a balance due in Arizona.  Would that be correct?  The credit was calculated automatically.  I don't know how much tax I paid in California for the portioned amount earned in Arizona, it is just a total of all income earned in both states on my return.

[MaryK4]

Because you had no withholding in Arizona, there should be a balance due- however, with the California credit, the refund from California should be more (or very close) than the amount of tax due to California.  @Becky B  (Note: this is assuming you had no credits, if you had any CA credits, subtract them from your CA refund before seeing if it is close to your Arizona tax due,