State Tax Credit

[Jim K1]

My normal state tax return is for California.  However, in 2022 I received income because of the sale of family property in the state of Wisconsin.  I received a K-1 and Wisconsin 2K-1.  I have completed my returns using TurboTax Business and Personal desktop software.  While my Wisconsin return looks correct, my California return keeps giving me a credit for the Wisconsin tax owed.  The California return has already subtracted out the amount of income through California adjustments, but still applies a credit.  In researching the California instructions this doesn't seem right, since California is not taxing the income from Wisconsin.  However I can't determine how to correct this.  I talked to TurboTax support and they were not much help in resolving this issue.  So I have two questions:  1.  Am I correct in assuming California does not owe me a credit, because they never taxed me on the Wisconsin income, and 2.  Does anyone know how to eliminate the credit the TurboTax keeps applying in the California return.  Thank you.  JimK2

[MaryK4]

As a California resident, you are required to report all income, regardless of source so the California credit is correct- however, can you clarify where on the California return you are seeing the subtraction?  (Form Number/Line number if available or screen shot of California income summary)

[Jim K1]

The subtraction is on Form CA (540) Line 7, Column B.  It is then included on CA Form S on Line 3 (Double Taxed Income) and therefore calculated the credit.

Jim K1

[ErnieS0]

California residents are taxed on income received anywhere. A capital gain from Wisconsin should be included in your California income. You do get a tax credit for Wisconsin tax.

1. On the screen “Estate and Trust K-1 Summary,” tap Edit
2. On Estate and Trust K-1 Adjustments, leave the California Total column blank. This will remove the subtraction from Schedule CA line 7, column B.