Severence after 27 years and change in states

[psifactor]

I have worked at this company based in AZ for the last 25 years.  All but the last 4 years I have worked in AZ.  My house is in AZ and has been the entire time.

For the last 4 years I have worked in CA for them.   A few critical dates:

1.  My last day in CA was 10/3/24.

2.  I left company while in AZ after returning to headquarters to turn in truck and computer on 10/4/24.

3.  I signed my severence agreement while in AZ on 10/8/24.

4.  I recieved lump sum severence payment while in AZ (package is based on total years with company) on 10/18/24.    

The severence payout was taked under CA state tax.

As AZ has a lower state tax, when I file taxes can I claim this as AZ wages (since paid in AZ, company based in AZ, I lived in AZ at the time, and based on all years at company) and get the credit back for all the CA state taxes?

[TomD8]

CA can tax non-residents on income from work actually performed in California.  Your severance pay is taxable by California to the extent that it represents compensation you earned in California.

Since you are an AZ resident ("My house is in AZ and has been the entire time"), all of your severance pay is taxable by AZ.  CA will give you a credit for the taxes paid to AZ on the portion of your severance that is taxed by both states.  The credit prevents double taxation of that income.