With 1/2 of the year in Cal, will I pay 1/2 of my 1040 income for a Cal state tax?
I live in Nevada now full time for the last 6 mos.
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You will pay California tax on the income that you received while you were a California resident, plus any income from California sources that you received after you moved. That might be more or less than half your income for the year. You will file a California part-year resident tax return.
Income from a Traditional IRA conversion that was done this week, would not be taxable from California when I moved in June? I suppose the date info will be on the info I enter in Turbo Tax?
Thank-you r j s !
Do you mean that you converted to a Roth IRA? If so, you are correct. It will not be taxable by California since you did it after you left California. The date will not be on your 1099-R, and you will not enter the date of the conversion in TurboTax. TurboTax will ask you how much of your income should be allocated to California. So for the IRA distribution you will allocate $0 to California. Keep the transaction confirmation with your tax records so that you can prove the date in case California questions it.
Thanks r j s, Yes it was converted to a ROTH.
Would be the same if one sold the traditional IRA to cash and paid the tax would it not?
Thanks for the info on how TT will respond to how much income will be allocated.
Yes, it would be the same.
If you permanently moved, you will file a part-year resident California return that will report your California-source income, and a part-year resident Nevada return that will report your Nevada-source income.
In most cases, the source of income is determined by where you are actually living or working when the income is paid to you. There are a few exceptions. For example, if you own rental real estate or sold property, that income is sourced to wherever the property is located, regardless of where you live. (So if you sold a home in California, that will be California income even if the sale didn't close until after the move.)
Sale of other investments or IRA withdrawals are taxed based on where you live when the withdrawal was made. Even if the investment firm or broker is located in California, the withdrawal is taxed based on where you live when the withdrawal was paid to you.
Note that in Turbotax, you prepare your federal return first listing all your income. When you indicate you were a resident of two states during the year, Turbotax will prepare the part-year returns, but you will have to tell the program how to allocate each item of income to one state or the other. Turbotax won't automatically know which state to assign income items.
Thanks Opus 17 and the others here!
Super helpful ! Especially on how Turbo tax will work. There is a TT update on income coming later this month and I will try and model it. It won't let me now, I tried....
No gain on home sale and I am not going to even report it as TT recommended after I got some advice from here. Wife and I sold for 360K which is what we built it for. I thought TT would want a state return from Nevada but it does not. Surprised me until I thought about it😉
You may have to report the house sale if you get a 1099S for it. Yeah, a lot of people from California are moving to Nevada. Nevada does not have a state income tax. There may be weekly program updates. I think they come out on Thursdays.
Thanks but no 1099S at escrow. Thanks for the thursday update info.
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