Filing a Non-resident California and Part Year North Carolina State Return

[jnbmccown]

I moved from CA to NC in July.  Can I allocate the respective percentage to each state of the combined Itemized deductions from my Federal Return OR do I separate and itemize the mortgage interest, real estate/personal property taxes, medical/dental expenses and charity donations for each state? I understand the allocation for Income but am at a loss with itemized deductions.

[MaryK4 · Accepted solution]

For the state allocation on deductions, if you can identify the source you would apply it to that state- for example, home mortgage interest for a home in CA would be allocated to California.  Anything that is received throughout the year can be entered pro rata according to percentage of time i each state.

[jnbmccown]

Thank you for the clarification, I have identified the amounts that should be allocated for CA and NC.  But to update, for my NC state return it was in my best interest to take the standard deduction and not itemize and was successful completing that return.  But for CA I still need to deduct the NC property and personal property tax dollars from the amount that was imported from the federal return into the CA state return, however I am not able to change the numbers on the CA (540NR) form itself in the program without “overriding” which I think is not what I should do?  But I also do not know where to go in the program to make the adjustment.  Any guidance would be really appreciated.  Again, thank you for your assistance.

[ErnieS0 · Accepted solution]

You don’t need to adjust your deductions on the nonresident California income tax return (Form 540NR) because of how California calculates tax for part-year residents.

California begins with your total income everywhere, then subtracts your standard or total itemized deductions (because it is using total income) to come up with California taxable income.

The base tax rate is based on the total income less total deductions number. California then prorates the actual tax based on your percentage of CA income. For example, if you earned 25% of your income in CA, your CA tax would be 25% of the base tax on all income.

[jnbmccown · Accepted solution]

Thank You Ernie for your response and I somewhat understand your explanation and still have a concern.  For the CA calculations the itemized deductions Include NC property tax and personal property tax, totaling $1607.00 which should not be reported/included on the CA return from my understanding. That is the reason for my original question as to where and how do I make that adjustment?  Any help will be greatly appreciated……

[ErnieS0 · Accepted solution]

Yes. North Carolina real estate and personal personal property tax will be included on the California part-year return. The California does not include a place to make adjustments.

California starts by calculating what your tax would be had you lived there the whole year and claimed all your income and deductions as California. Then it multiples this total tax by the California percentage of your income.

[jnbmccown]

Well, I think this is good news.  But just to confirm, I can legally file my CA return as it has been processed in TurboTax?  Thank You again in Advance…..

[ThomasM125 · Accepted solution]

You can legally file your California return as is has been processed in TurboTax. TurboTax guarantees the accuracy of the calculations on your tax return. So, if you answer the questions truthfully in the California section of your TurboTax program, you should be fine.

[jnbmccown]

You just made my day, Thank You for your response and guidance, I really appreciate all the input I received from everyone!!!