I am a full-year CA non-resident. Can I assume that TurboTax knows how to compute adjustments to my California income based on my residency dates? (i.e. zero days in CA). I have CA rental property and also have non-California property. Can I assume that based on my full-year non-residency that Turbotax will understand that only my CA rental income should be taxed and all other income from non-CA rentals and non-CA investments should be non-taxable in CA? Or do I need to make explicit adjustments to my CA income to subtract out the non-CA income?
I tried to figure this out by reading the saved tax return PDF but still didn't feel 100% sure that I understood the adjustments.
You will have to manually zero out your IRA distribution and rental income. TurboTax does not do any kind of proration.
California uses the residency days to determine residency. For example, you will be presumed to be a California resident for any taxable year in which you spend more than nine months in this state.
Or you are presumed to be a California nonresident if outside California under an employment-related contract for an uninterrupted period of at least 546 consecutive days.
No. California does not use residency dates to compute California tax. It uses the percentage of California income versus total income as if all your income was taxed by CA.
As a nonresident, you will have to make adjustments in the Nonresident Adjustment section of California to tell TurboTax which income is California income.
For the tax computation, CA starts with federal adjusted gross income and then subtracts your federal itemized deductions to come up with California taxable income (after some state-specific adjustments).
This is the base tax, or the amount of tax if all your income was earned in CA. You are then taxed on the CA percentage of this income. So if 10% of your total income is from CA, you pay 10% of the base tax.
You can see the calculation on lines 31-38 of Form 540NR.
Hi Ernie. Thanks for your feedback. My question is slightly different from what you answered. I asked if TURBOTAX takes the dates of residency into account, not if CA takes the dates into account. Here are my two specific examples, given that I had zero days in CA:
1) I had an IRA distribution in 2021 - so, would TT take into account that I have zero days of residency in CA and therefore remove the IRA distribution from CA taxable income? If not, then do I need to manually subtract this distribution from CA income?
2) I have a rental property in a different state - so, would TT take into account that I have zero days of residency in CA and therefore remove the non-California rental property income from the taxable CA income? Or do I need to manually subtract out that non-CA rental property?
Also, just curious, If CA doesn't use residency dates, then why does CA ask for dates for entering and leaving the state? I can't imagine that that is just random info that CA asks for.
Thank you.
You will have to manually zero out your IRA distribution and rental income. TurboTax does not do any kind of proration.
California uses the residency days to determine residency. For example, you will be presumed to be a California resident for any taxable year in which you spend more than nine months in this state.
Or you are presumed to be a California nonresident if outside California under an employment-related contract for an uninterrupted period of at least 546 consecutive days.