Hello,
I am a researcher on a J-1 visa and I have a tax treaty with my country (Czechia) that exempts my income from federal income tax. I have both W-2 and 1042-S forms. I was a dual-status resident in 2024 (nonresident for the first three months and then resident the rest of the year), so I need to fill out Form 1040 as my main federal tax return (and also 1040-NR to show income for the nonresident part of the year). Since Turbotax does not support Form 1042-S, I added the amount 1042-S as Other reportable income and I also added this amount as negative to exempt it from the federal tax, as I found here. This produces in my opinion a correct federal tax return. However, I am having problems with the California state return.
Due to my J-1 visa, I was a nonresident in California in 2024 and the tax treaty does not apply. When I was filling out the California return in Turbotax, there are tabs Nonresident Adjustments and Other California Taxable Income, where there are two columns - Federal Adjusted and California Amount. I have federal lines with the amount from 1042-S and the next line with the negative amount. I put the same numbers into the California column but that leads to no taxable income in California. More specifically, columns A-D of Schedule CA (540NR) are all zeros and only column E shows the state wages from my W-2 (the same amount as in my 1042-S). As a result, Turbotax thinks I should get the refund of the full state taxes withheld from my paychecks, that is, no income tax in California at all, which is not correct. For comparison, in my 2023 California state return, line 27 columns C-E showed the W-2 state wages and I was taxed on that.
I also tried the following:
1) I tried to put zero instead of the negative amount in the Nonresident adjustments but that still results in no state tax. Column C of line 27 is still zero.
2) In the section Here's the income that California handles differently, there is Income exempt by US Tax Treaties, but that does not show any amount or anything to adjust.
3) I tried adding additional income via the Other Adjustments to Wages. Then, the line 27 columns C, D are this added amount and column E is double the amount (one from W-2 plus the extra added) and the total state tax is almost double the withheld tax, which I don't think is correct either.
It seems to me that the original problem might be with my W-2 form that shows no federal wages (Box 1). As a result, Columns A-D of Line 1a of Schedule CA (540NR) are all zeros and column E is the state wages from my W-2 . If I could change Columns C and D to the state wages that would probably fix the issue. Is it possible to manually change that?
Would anyone have any suggestions or advice?
