Refund adjusted due to multiple state filing without documentation

[abj5005]

This is an informational post that I hopes makes it to Intuit since this is the only way I have found to submit issues.

During last tax year I started working for a new employer located in another state.  Due to the pandemic, I was able to work remotely temporarily and did not relocate until after the new tax year began.

So, residence in Indiana.  Employed in Indiana Jan - April.  Employed in Alabama May - December. 

I filed taxes in both Indiana and Alabama through Turbotax.  I was set to get a large refund from Indiana and then owe a large amount to Alabama.  However after submission through Turbotax, I received a notification from Indiana that the credit for taxes paid for other states was denied due to lack of documenation.

Since I filed both returns through Turbotax, if additional documentation was required, should it not have been included at the time of filing?????

[SundayInSalem]

You do not qualify for a credit for taxes paid for other states because you were a part-year resident of two states.

You can only claim a credit if you live in one state and work in another state at the same time.

Indiana will tax all your income while you lived in Indiana. Alabama will tax all your income while you lived in Alabama.

If your employer made a mistake and withheld Indiana tax for the whole year, you would get a large refund from Indiana because you are reporting income from January–April, but withholding from January–December.

That is still not double-taxed income. That is an adjustment of your part-year wages.

If you reported this wrong, you can file an amended tax return.

[arj5005]

At least for the state of Alabama there is a non-resident form.

I filed Indiana taxes as a resident of Indiana, I filed a non-resident state of Alabama form for the income earned within the state of Alabama while I was residing in Indiana. I am a temporary, not permanent remote worker.  My employer does not conduct business in or have a presence in the state of Indiana.  Although residing in Indiana as a temporary remote worker, my income was earned within the state of Alabama.

> If I am not a resident of Alabama, but earned income from Alabama sources, am I required to file an ...

Yes. According to Reg. 810-3-15-.21 - Nonresident individuals receiving taxable income from property owned or business transacted (including wages for personal services) within Alabama are taxable on such income from within Alabama. They should file a Nonresident Individual Income Tax Return, Form 40NR, each year. 

The  issue is the required documentation.  If there is additional documentation required when filing multiple state returns, it should be produced and included as part of the Intuit service.  The only issue with my returns should be needing to now produce the documentation required and provide to Indiana which is resulting in a significant delay to processing my return.