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Stockmoose16
Returning Member

Louisiana above the line deduction - NR

I worked in two states this year, with about 10% of my income coming from Louisiana, 90% from CA.  I had an above the line legal deduction on my Federal taxes that carried over to my AGI when doing my CA taxes, so no additional steps needed to be taken.  Now I'm doing my LA taxes, and there's a section that says "Adjustments to Louisiana Taxable income."  Under the Federal amount, it shows the deduction I took for the legal fees.  And then it asks me to enter the Louisiana amount. Should I be inserting those legal fees into the Louisiana income adjustment box? Or has that already been included like in CA? Also, I had taxable interest and dividends on my Federal taxes due to stocks and bonds. Do I need to pay Louisiana taxes on those, as well?

3 Replies
DavidS127
Expert Alumni

Louisiana above the line deduction - NR

The interest and dividends you received are taxable by your state of residence.  If you had more than one state of residence, you'll (more or less) pay taxes on the portion received while a resident of each state.

 

For the legal expenses adjustment to income, the CA part-year resident/nonresident return takes care of its "piece" of that by calculating taxable income as if all income was from CA, and then applying a "ratio" to that based on CA AGI to total AGI.  So, basically that "ratio" times the legal expenses adjustment is how much CA "uses".  For example, yours should be close to the 90% of income that was earned in CA.

 

LA calculates nonresident income by counting only the "Louisiana source" income, adjustments, etc.  So, for the LA return you can take the percentage that isn't CA, and use that much of the legal expenses for the LA tax return.  Your percentage should be close to the 10% of income that was earned in LA.

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Stockmoose16
Returning Member

Louisiana above the line deduction - NR

I was only a resident of California. I did some work in Louisiana that took me there for about a month over the course of 2019.

 

In thinking about it, why do I need to allocate any of the legal expenses to Louisiana? They all occurred IN California since it was a California state Civil case. And I don't see any way to create a ratio. From looking at the forms, it appears that California automatically takes into account the ATL deduction because it uses AGI from the 1040. And that AGI is calculated by subtracting out ATL legal fees. 

 

Does this sound remotely correct? 

MaryK1101
Expert Alumni

Louisiana above the line deduction - NR

Yes, you are correct, you do not need to allocate the legal expenses to Louisiana but if they were related to the LA income you could have.

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