Georgia depreciation adjustment Line 5

[rkad29]

I am a GA resident with out of state rental income; TT shows an adjustment on my GA return, line 5, for differences in depreciation treatment between Federal and GA returns (the adjustment bumps up the GA income).  The depreciation on my Federal return that GA is adjusting for is, however, from out of state income. Since that income is not taxable in Georgia, should there even be an adjustment to Federal income (for GA purposes) on depreciation that is out of state?  This amounts to indirect taxation by Georgia on out of state income.  The interview steps me through that line and gives me a chance to change it and I'm wondering if it should be -0- .

[AmyC]

If you are a GA resident, GA taxes all of your income and gives you credit for tax paid to the other state. 2022 IT-511 Individual Income Tax Booklet page 9 states:

Full-year Residents Full-year residents are taxed on all income, except tax exempt income, regardless of the source or where derived.

You get credit for the lower state tax on the lowest taxable amount.

• Each state calculates taxable income differently. 
• Each state has its own tax rate/ system.
• You get the lowest of both categories as a tax credit.

GA calculates the income differently and you are subject to the difference as a GA resident.

Always prepare your nonresident return first for proper credit.