My federal and state wages on the W-2 form are different, but apparently the state income is calculated from my federal wage.

[malda]

Hi,

I am a California resident (a graduate student in a school in California), and on this year's W-2 form, my state wages are significantly smaller than my federal wages. I believe this is because I worked remotely from Texas for about 9 months in 2021. But on TurboTax, it seems that the income used for state tax filing is calculated based on my federal wages even though the state tax withheld on the W-2 form seems based on my state wages. As a result, I owe state taxes, even though I get refunds for federal taxes. Is this how California taxes are supposed to be calculated, and if not, is there a way to correct it so that it correctly reflects the fact that my state wages are significantly smaller than my federal wages (because of the fact that I work remotely from Texas)?

In case this clarifies my situation, I never intended to live in Texas, and I visited there for temporary business purposes (although I ended up staying there for 9 month) related to my research, so I consider myself a California domicile.

By the way, according to this web post (https://www.palmspringstaxandtrustlawyers.com/nonresidents-working-remotely-for-california-businesse...), I don't owe California income taxes for the service I performed outside California. Below is a relevant paragraph copied from it. But I'm not sure if this applies to my case, since I consider myself a California domicile as explained above:

"But what if the employee is a nonresident who never sets foot in California to perform his services? Then the source rule works in the nonresident’s favor, even if the employer is California based. Remember, the income sourcing is determined by the location where the employee services are actually performed, not the location of the employer. A nonresident programmer who monitors and upgrades satellite dish software for a Los Angeles-based media company, all while sitting comfortably in front of his computer in his Austin, Texas condo, doesn’t earn California-source income and doesn’t have to pay California income taxes, as long as the work is performed outside of California."

[ThomasM125 · Accepted solution]

Since you are a resident of California, you will be taxed on the income you earned in Texas. Normally, you could get a credit for taxes paid to another state, but since Texas does not have a personal income tax, you must pay tax in California on the income earned there.