Out of state income for CA

[ungar-steve]

We are residents of CA, and my daughter goes to school in WA.  She has earned income in both CA and WA.  Using TurboTax it calculated CA taxes based on the total of both the WA and CA income.  I used the TurboTax live option to ask about this and was told that only the CA income should be taxed in CA and they had me enter an adjustment to her income to remove the WA income.

In looking around it seems like being taxed in CA for all income might be correct even though some of the income was out of state, plus it seems odd to have to do an adjustment to remove out of state income.

Can someone confirm which is correct - the TurboTax expert or the software?

[Vanessa A]

As a CA resident, all income from all sources worldwide are taxable to CA.  Generally, you would pay taxes on the income to the state in which you earned the income and then take a credit for the taxes paid to that state on your CA return so the income is not double taxed.  However since WA has no state tax, you will just claim all the income on your CA return without the need to file a non-resident return.  

Residents – File a California tax return if either your gross income (which consists of all income you received from all sources in the form of money, goods, property, and services, that is not exempt from tax) or your adjusted gross income (which consists of your federal adjusted gross income from all sources, reduced or increased by all California income adjustments) is more than the amounts shown on the chart below for your filing status, age, and number of dependents. FTB Pub 1-31

Other State Tax Credit

[ungar-steve]

Thanks, that’s what I was thinking but the online TurboTax expert said otherwise.