(regarding filing in two states) California and Oklahoma ~ CA question

[CaddyGrn]

Hello,

I live and file the vast majority of my income in California.  I also have oil royalties from Oklahoma.  My CA tax form asks me to let them know what my AGI was in 2022 for Oklahoma.  However, on the Oklahoma form, it shows two different AGI numbers:  It has the AGI for Oklahoma, and in a separate line it has the AGI for All Sources.  Which figure do I use, the one only from OK or the "All sources"?  Again, thanks to anyone who can enlighten me on this!  I appreciate the help on this forum so very much!

[MonikaK1]

Complete the Oklahoma return first as it is the Nonresident state. 

The Federal Adjusted Gross Income (AGI) will be adjusted using the Oklahoma adjustments, allowed in 68 Oklahoma Statutes (OS) Section 2358, to arrive at AGI from all sources. The AGI from all sources is used to determine the taxable income. After the taxable income is calculated, it is prorated using a percentage of the AGI from Oklahoma sources divided by the AGI from all sources. This prorated tax is the Oklahoma tax. See the Oklahoma nonresident return instructions for more information.

Where the California interview is asking for the Oklahoma AGI, it is looking for the figure that represents the percentage of the AGI that was taxed by Oklahoma. You may be able to get a credit on the California return for the tax paid to Oklahoma on Oklahoma-sourced income. The credit will offset the taxes paid to the other state, so you are not paying taxes twice. See this California FTB webpage for more information about the credit.

See also this TurboTax article and this one on multiple-state situations.

[Abracadebra]

I'm in Texas with Oklahoma non-resident income but am perplexed about the arrival of tax due using the Adjusted Gross Income from All Sources. Why should earnings from other states be part of the equation in Oklahoma? After many deductions, the AGI All Sources is 5 times the Oklahoma income.

[DMarkM1]

Understand.  Most states use a proportion to arrive at the portion of resident tax owed by nonresidents to their states.  The proportion is arrived at by dividing OK allocated income by the total income.  That proportion is multiplied by the tax, as if resident in OK, to arrive at the OK tax on the OK allocated income of nonresidents.