I have a Schedule K-1 which has income and dividends. I moved out of California in April 1, 2021. Should I include all of the income and dividends in my Schedule K-1 in California's Form 565 (Partnership Return of Income)? Or should I only include the FULL income and dividends if it was distributed during the time of when I lived in California?
if it is a CA based business then you're taxed on the income for the whole year. if not, then you're taxed on the income earned while you were a resident despite when it was distributed.
Thanks Mike9241 for the response.
The income is from Fidelity - unsure if I should categorize this as a CA base company given its headquarter is in MA?
Can you clarify the difference between "earned" and "distribution" with an example of a dividend income in a K-1? I am trying to understand your statement "then you're taxed on the income earned while you were a resident despite when it was distributed".
Thanks Mike9241 for the response.
The income is from Fidelity - unsure if I should categorize this as a CA base company given its headquarter is in MA?
Can you clarify the difference between "earned" and "distribution" with an example of a dividend income in a K-1? I am trying to understand your statement "then you're taxed on the income earned while you were a resident despite when it was distributed". An example will help me understand what you are trying to state.
@upnguyen5 @Mike9241 is asking about YOUR business. You stated that you needed to file a California Form 565 (Partnership Return of Income).
If your partnership is a California based business and you have to file a partnership return in California then you have to include all of the income that that partnership earned over the course of the year no matter where it earned it.
In the K-1, the partnership address is in Texas. Income is not from a CA source. I used to live in CA for 3 months in 2021. I then moved to Texas. In Form 565 (schedule K-1 worksheet, partnerships), under the field "California Amount", I believe I should not enter any value for ordinary income? But in the field "Amount from Federal Schedule K-1", I should leave the income as is ($100)?
To determine the California amount, you will need to allocate the income from Schedule K-1 based on the number of days you were a California resident. The Amount from Federal Schedule K-1 would be the actual total from the K-1.
From FTB Pub. 1100:
The allocation of income between the period of residency and the period of nonresidency must be made in a manner that reflects the actual date of realization. In the absence of information that reflects the actual date of realization, you must allocate an annual amount on a proportional basis between the two periods, using a daily pro rata method.