Is a pension from another state taxed in California as a non-resident

[ds102]

I have been a non-resident of California receiving two teacher retirement pensions - one from CA and one from another state in which I reside. On Schedule A (540NR), Part II, Section A, line 5b,  I subtracted in column B the amount of my CA pension as I am entitled to do as a non-resident  because I am not taxed on it. However, it looks like CA is still keeping my out of state pension as part of my income and taxing it. The instructions states for this line on the form: Do not deduct income that was earned while a nonresident of California or from sources outside of California. How do I ensure that CA does not tax my pension from another state where I already pay taxes on it?

[DoninGA]

If you have not worked or lived in California at any time in 2023 then you do not need to file CA tax return.

You only report your income on your resident state tax return, if your state has a personal income tax.

The pension payment from CA is not taxable by CA if you do not reside or work in CA.

[ds102]

Yes, I know that as mentioned and that has been subtracted from this form. My concern is a pension from the state in which I now reside - how do I make sure that CA is not taxing it as income in the Schedule CA 540NR form as the instructions say I can't subtract it as it was income from out of state? Thanks!

[ds102]

I have rental income in CA so I do and have filed non-resident tax forms for this income. Pensions also have to be recorded in the Schedule CA 540NR form.

[DoninGA]

Then you will need to explain why you are filing as a nonresident of California if you do not reside or work in CA.  There is no need for you to file a Form 540NR.

You received pension income, that is reported on a Form 1099-R.  On the Form 1099-R are CA state income taxes being withheld in box 14 of the 1099-R?

[DoninGA]

Got it.  So you need to file for the rental income.  However, you Do Not enter your pension from CA on the 540NR unless you have state taxes withheld on the Form 1099-R.

[ds102]

I am fine with the CA pension - I am and was not taxed as a non-resident and that is not the issue. My problem is with my other pension (not generated in CA) and the fact that it appears to be taxed in CA - I don't know where or how to subtract it. I have to file a non-resident tax form as I also have income in CA from a property rental.

[ds102]

Ok, so I just delete my pension amounts on line 5 of Schedule A, Part II, Section A, line 5, column A? Or enter the entire amount for both pensions in Column B as subtractions?

[DoninGA]

Yes, remove the pension income you reported.  You enter neither pension income on the CA Form 540NR.  You only report your rental property information on the 540NR.

The pension income from CA and the other state reported to you on a Form 1099-R are entered in the Federal section of the TurboTax program.  The amounts flow to your resident state tax return.

[ds102]

Correct, they flow onto the form so I didn't know how to deal with the out of state pension. Looks like I will now have to go back a couple of years to amend the CA tax forms because I have the out of state (only) pension on those forms as well. Ugh. Just started taking the CA pension in 2023 so not an issue there. I do have the 1099 forms so if CA has a problem with not reporting them, they can check the forms from the federal returns. Thanks so much for your help and advice!

[TomD8]

Just enter all your pension income on Line 5, Column B, of your Schedule CA (540NR).  By federal law, states cannot tax the retirement income of non-residents.