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Your resident state will tax you on ALL income earned. Since the Supreme Court has ruled that states can't tax you twice on the same income, states provide for a credit for taxes paid in other states.
Some states have reciprocal agreements with other states which makes life easier. This is generally in the context of an employee receiving a W-2 where you would complete a form and the payroll provider would only withhold state taxes for the resident state.
While AZ and CA have reciprocity between them, it does not help you since you are self employed.
As noted above, states provide for a credit for taxes paid in other states. This credit is generally taken on your resident state tax return. However, to make life a little more complicated, some states are "Reverse Credit States" where the credit is taken on the nonresident state tax return (not on your resident state tax return).
So in your case, as you can see on the attached AZ instructions, this appears to be the case with Calif. See the shaded box in the bottom right hand corner of page 1.
https://azdor.gov/forms/tax-credits-forms/credit-taxes-paid-another-state-or-country
What you will do is complete your AZ return as you typically do. Then complete a Calif nonresident tax return and report the Calif income. You will then claim the credit for taxes paid on this income on the Calif return. I have not looked up the tax rates for each state, but your tax should be minimal at best; this is because I am assuming that the Calif tax rate is higher than the AZ tax rate (only an assumption on my part).
Your resident state will tax you on ALL income earned. Since the Supreme Court has ruled that states can't tax you twice on the same income, states provide for a credit for taxes paid in other states.
Some states have reciprocal agreements with other states which makes life easier. This is generally in the context of an employee receiving a W-2 where you would complete a form and the payroll provider would only withhold state taxes for the resident state.
While AZ and CA have reciprocity between them, it does not help you since you are self employed.
As noted above, states provide for a credit for taxes paid in other states. This credit is generally taken on your resident state tax return. However, to make life a little more complicated, some states are "Reverse Credit States" where the credit is taken on the nonresident state tax return (not on your resident state tax return).
So in your case, as you can see on the attached AZ instructions, this appears to be the case with Calif. See the shaded box in the bottom right hand corner of page 1.
https://azdor.gov/forms/tax-credits-forms/credit-taxes-paid-another-state-or-country
What you will do is complete your AZ return as you typically do. Then complete a Calif nonresident tax return and report the Calif income. You will then claim the credit for taxes paid on this income on the Calif return. I have not looked up the tax rates for each state, but your tax should be minimal at best; this is because I am assuming that the Calif tax rate is higher than the AZ tax rate (only an assumption on my part).
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