Is AZ employer withholding CA state taxes, and I only file CA return, or is AZ withholding AZ taxes; Box 15 on AZ W-2 shows "CA"?

[csfgordo]

Full-time CA resident, AZ wage income over $5000 earned over internet. I have other CA wage income reported on W-2's.  TurboTax does not let me apportion AZ W-2 to AZ-NR state return, although I can apportion other income. How can I force TurboTax to apportion the AZ W-2 income to the AZ return?

[DanielV01 · Accepted solution]

You don't need to file an Arizona return for this income.  The reason why is you are a telecommuter for the Arizona company, but you are working remotely in another state.  There are some states that do tax out-of-state telecommuters as working within their state, but Arizona is not one of them.  (And, if they did, California, your resident state, would still tax your income).   So the income and tax withheld on the return is correct as reported, and you will not need to enter anything on Arizona apportionment screens, and if you have no other income that can be reported to Arizona, you will not need to file an Arizona return at all.