Should all state earned income (540 line 12) or only the CA state earned income (as TT did) be entered under 2019 CA FTB 3514 line 13 for CA resident (form 540)?

[nishi4939]

This is for CA earned income credit (FTB 3514).  2019 TT entered only my CA state income in Line 13 of CA FTB form 3514 which FTB disputed and claimed I needed to enter all states' income (line 540 line 12 as the 3514 instruction suggests). So theCA FTB reduced my earned income credit from what TT computed.  Is the FTB correct? And if so, should not the TT take responsibility for this mistake and compensate me?

[ErnieS0]

TurboTax is correct. California earned income for purposes of the California Earned Income Tax Credit is wages, salaries, tips, and other employee compensation, subject to California withholding. Your Massachusetts W-2 was subject to MA withholding, so it should not be included in the computation.

Looking at the situation from the other way around, California says if you were a nonresident, you must have earned wage income that is subject to California withholding to qualify for the credit.

Refer to California Earned Income Tax Credit sections B. Differences in California and Federal Law and Step 5 California Earned Income.