CA pension

[uscrn1995]

My husband retired in March of 2021 and moved out of California to our property we purchased in 2020 in TN. He has a W2 for Jan-March 2021.  He started collecting his pension in May of 2021. I stayed in California in a rental property with our adult children earning income until end of July 2021 and then moved to our home with him in TN. My question is do we have to pay taxes to CA on his pension income?

[TomD8 · Accepted solution]

Pension income is taxable only by the recipient's legal state of residence at the time the pension income is received.

[uscrn1995]

Thank you for the reply. Since CA is a community property state, does that factor in since I was there until July?

[TomD8]

Very good point.  Yes, California does consider retirement benefits to be community property.  Community property rights only accrue from the date of marriage.  So, if your husband was employed and receiving pension benefits before your marriage, there would be some pro-rating involved.  In that case, best to see a professional to sort it all out.  But yes, if you were a CA resident when your community share was received, your portion would be taxable by CA.

[uscrn1995]

Thank you. We're filing married, jointly. So the total pension amount from May to July, or "community share" 50% of said pension amount?

[uscrn1995]

Anyone know the answer to this question regarding the community property angle? I called the Franchise Tax Board in California, of course they said just to pay for the months on my husband's pension in which I was still in California, even though he was out of California before he even started collecting on his pension. But they couldn't find anything specific to our situation.

[LeonardS]

California is a community property state and levies taxes on residents from all sources of income including income from outside of California.  Because it is a community property state for the time you were in California Jan to July 2021 your husband's income was community property and therefore is taxed by California.  Once both of you do not reside in California federal law prevents California from taxing your husband's pension even if it is from a California source.

[uscrn1995]

From January to July? Even if he didn't start collecting until May?

[uscrn1995]

And also, 50% of said pension? or the total amount of his pension for said months?