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Level 2
posted Feb 29, 2020 5:49:13 PM

Is state tax filing required for ESPP bought in prior yer but sold in current year

Should I file CA state tax return if I never worked in CA in 2019, but I sold ESPP stock from previous employer (I used to work in CA before 2017). Due to the sale of ESPP, I received a W2 from prior employer showing CA wages. 

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1 Best answer
Expert Alumni
Mar 1, 2020 6:52:15 PM

Yes, you should file a CA non-resident tax return.  Include only the ordinary income amount recognized from the sale of your ESPP stock.  Do not include the capital gain.

2 Replies
Level 2
Feb 29, 2020 10:08:58 PM

I think I found the answer to my own question on FTB CA website - quote:

"If you exercise an option under an employee stock purchase plan while a California resident or nonresident and later sell the stock in a qualifying or disqualifying disposition while a nonresident, California will tax the resulting ordinary income to the extent you performed services in California from the grant date to the exercise date. Any capital gain has a source in your state of residence at the time you sold the stock." 

 

So this means I should file a CA income tax return as non-resident. 

Expert Alumni
Mar 1, 2020 6:52:15 PM

Yes, you should file a CA non-resident tax return.  Include only the ordinary income amount recognized from the sale of your ESPP stock.  Do not include the capital gain.