How to claim excluded days worked in Texas due to business travel from my resident California taxable income? Where I can find Schedule CA (540) in Turbotax?

[Sun99]

I am a remote employee of a Texas company but live in California. I travel to Texas over 100 days a year and have a business presence with a Texas company.

[MaryK4]

If you are a California resident, you must report and pay tax on all of your income.  You would be able to claim a credit for taxes paid to another jurisdiction, but since Texas does not have a personal income tax you do not have to file a Texas return for the days you worked there.

[Sun99]

Thanks for the quick reply. So California has adopted a residency tax system, but is abusing a state's tax system with no income tax to take tax revenues. If a resident of another state works in California, they are required to pay taxes to California.

[Sun99]

I think I can use Schedule CA (540) to adjust your income to reflect the days worked in another state. On Schedule CA (540), line 21, I can exclude the income earned during the business trip in Texas. Is there any reason why I cannot do this? Does TurboTax support this input?

[Hal_Al · Accepted solution]

 Q. I can exclude the income earned during the business trip in Texas. Is there any reason why I cannot do this?

A. Yes, it's against the law. 

As others have said, You report all your income on your resident state return, including the income earned in the other state. Your home state calculates tax on all your income, but gives you a credit, or partial credit, for tax you paid to the other state.

When you worked in a state without an income tax (e.g. Texas ), there will be no credit, since there was no TX tax. In other words, having worked in a state without an income tax does not get you out of paying state tax on that income, to your home state.

Q. Does TurboTax (TT) support this input?

A. No, because it's not allowed. The closest thing TT has is "income taxed by another state".