File CA tax as non-resident

[iping22]

We are full time ID resident, and need to file CA tax because we earned and sold a rental property in 2021. My husband work from home (in ID) as self-employed, and his client is based in CA. 

So, my questions are:

1. when Turbo tax ask income from CA sources, I should enter all the income from CA which includes the property sold and income earned from CA. But how about the capital gain? I purchase the stock while in CA, but sold it while I was ID resident. 

2. when Turbo Tax ask about the self-401k retirement account contribution, which state should I put it? 

Thank you very much for helping. 

[ErnieS0]

California taxes a nonresident on income earned while physically present in the state. From your post, it appears your husband's income would not be taxed to California because he performs all the work in Idaho.

See COVID-19 frequently asked questions for tax relief and assistance

The property sale is California source income because the property is in California.

The stock would depend on the type. If it's regular publicly traded stock, then it is not California source income. If it is employee stock or stock in a private California corporation then it may be California income.

The 401(k) contribution would be Idaho, assuming, as mentioned above, that all the work was done from home in ID.

[iping22]

Thank you @ErnieS0  to clarified it for me , I finally get through that part. I finish the CA state tax as non-resident and move on to ID state tax. In the end, it is basically telling I don't owe any taxes to ID since I already paid tax to CA. I switch to form format, and try to understand it. It looks like the number from 1040 has been plug into CA and ID forms. In 1040 it combine the business income, the capital gain from property and stocks and subtract all the deductions, so the number being used in CA tax already include my income as ID resident ??  so I am paying CA tax and when I do the ID tax, the tax due is 0 since I paid  CA. I feel like I did something wrong, but I really can't find where it went wrong. 

[MarilynG1]

Since we can't see your return in this forum, it's hard to say if you reported it correctly.

Going through the California interview, you should come to a page asking about 'California adjustments' where you would have subtracted the Schedule C income earned in Idaho (and any other income not sourced to CA).

Review your CA return.  Most states start with the AGI from your federal return, then you need add or subtract accordingly for income that does not belong to that state.

Your Resident State taxes all of your income and figures your tax.  The Tax Amount is then adjusted for taxes you reported paid to another state (in the Idaho interview).

Review your Idaho return to verify this. 

If you want someone to review your return before filing, you could ask for an Expert Review.

Here's more info on How to File a Non-Resident State Return.

[iping22]

Thank you for pointing me to the right direction. I was so confused and was looking for expert to review my file. I will looking info CA adjust income section, I am pretty sure that is where went wrong. 🙂

[iping22]

@MarilynG1  I can't find where to substract the interest, dividend and self-employed income from my Fed AGI since all these income should be reporting to Idaho state. I review the CA state, and under the wages, this is the page it came up. Am I in the right place? 

[iping22]

I am not sure where enter all the adjustment, (the income earning in ID, the interests, dividends and capital gain substract from my Fed ACI) so I entered everything in other adjustment to income, will it work?

[MarilynG1]

At the screen 'Your CA taxes are ready to check' (screenshot), Continue past the long list of adjustments to 'Done with Adjustments' at the bottom. 

The next screen is 'Nonresident Adjustments'. Continue, and you get screens asking about taxable items in your Federal Return (first page is W-2 income), displaying the Federal Amount and with a blank field for the 'California Amount' (screenshot).

For self-employment income, continue to a screen titled 'California Business Income or Loss' that has your Federal amount filled in.  You would enter $0 for 'California Amount' (screenshot). 

[iping22]

@MarilynG1 Thank you so much for your help. I called in today to Turbo Live, and she wasn't much of help.  Here is the screen I got when go to Nonresident adjustment, it only shows "ordinary dividends", and I do have interests as income. It is strange. While I switch to the "forms" view, I did notice that our self-employed income was not in the subtraction column B. I did more digging and found from the IRS website, it state "Do Not deduct income that was earned while a nonresident of CA or from sources outside of CA, There must be a difference in tax law. Generally, if a CA resident cannot subtract the income in Column B, a nonresident or part-year resident may not subtract income from column B."