Out of state craft fair sales

[stong]

I am a California resident and sold some art work at a 2 day craft fair in Oregon and a 2 day craft fair in Pennsylvania.

I paid sales tax to Pennsylvania on my craft fair sales. Oregon does not have a sales tax. I am reporting the income from my Oregon and Pennsylvania craft sales on my Federal and California State income tax returns.

Do I also file separate state income tax forms with Oregon and Pennsylvania on my sales (in addition to reporting that out of state income on my California tax return)? If yes, can I avoid double taxation on the same sales (e.g., paying CA and PA income tax on the same sales)?

[MaryK4 · Accepted solution]

If you  had income in Pennsylvania, you should file a state tax return.  (Nonresident individuals must file a Pennsylvania Income Tax Return (PA-40) when he or she realizes income generating $1 or more in tax, even if no tax is due.)  You have to file and Oregon tax return if your income from Oregon sources is more than what is defined in this chart.

If you pay taxes to Pennsylvania or Oregon, you will be able to take a credit for any double-taxed income on your California resident tax return.  You will want to prepare Pennsylvania and Oregon first, to see if you have to claim the credit in California.

[stong]

If I report net sales of $742 (from CA and craft sales at conventions in OR and PA) on my 1040 Sch C line 31, where can I split up the income between the CA, OR, and PA when filing state tax returns (e.g., $292 from net sales in CA - my domicile; and out-of-state craft fairs I sold at in OR ($250) and in PA ($200)? My CA Sch C and worksheet takes the entire $742 from the Federal Sch C. Should I override the Sch CA column B and do the same override for OR and PA tax returns? Thanks.

[AmyC]

CA taxes the entire income since you are a CA resident. If you have any tax due to PA, then CA will give you a credit. The PA return is only required if you have taxable income. If your PA return shows no tax due, then you are not required to file it.

 Please carefully follow these directions to prepare the states in a special order. You may need to delete both states and begin again.

1. First, prepare your non-resident PA return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
2. Then prepare your resident state CA return and it will generate a credit for your income already being taxed in the non-resident state. 
3. The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state, if they have a higher tax rate.

It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.

Related: Why does tax-free income from Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas...