Does it matter which state return I fill out first?

[hagainassau]

I have to file in two states because I have rental property in a nonresident state.

[DoninGA · Accepted solution]

Complete the non-resident state tax return first.  Then the resident tax return.

[bob667]

is there a reason for this?   

[Hal_Al]

Yes. Your resident state will give you a credit, or partial credit, for the tax paid to the non resident state. So, the non resident state tax must be calculated 1st

[TomD8]

@bob667 --  There are a few exceptions to the "non-resident return first" rule.  The exceptions all involve California.  Post back if one of the states involved is California.

[bob667]

yes, its California...thank you

[TomD8]

@bob667 --  In which state do you live, and in which state do you work?

[bob667]

thank you for your time!  I live and work remotely in Hawaii all of 2019 for a company in Cal

[TomD8]

@bob667 -- Are you a W-2 employee, or an independent contractor who receives a 1099-MISC?

[bob667]

i am W2 employee...thank you

[KrisD15]

California does NOT tax non-resident telecommuters. 

You do not owe California State Income tax on that income. If California tax was withheld, you can file to get that tax refunded. 

[TomD8]

<<"i am W2 employee...thank you">>

@bob667 — Then your income is not taxable by California.  But it is fully taxable by your home state of Hawaii.