State Tax filing for remote workers (CA & NC)

[lzuniega]

I live in CA and I work remotely for a Company in North Carolina the whole year of 2021 without traveling to NC.  I received 2 W2s.  One with Fed and CA taxes and another one just for NC Tax.  I do my own taxes ever since using TurboTax.  Do I need to file a non-resident income tax for NC?  Any help is much appreciated.  Thanks, Luis.

[Rick19744]

While the facts are limited, it appears that you are subject to NC tax since you derived income from a business, trade, profession, or occupation carried on in North Carolina.

This area / issue has taken the spotlight as a result of the pandemic.

So yes, you will need to file a NC nonresident tax return for the NC wages.  Prepare this return first in TT.

Then prepare your CA return in TT.   Since CA is your state of domicile, they will tax all of your income.  However, you will then get a credit for taxes paid to NC on your CA tax return.

[TomD8]

@lzuniega --

"...income from a business, trade, profession, or occupation carried on in North Carolina..."

The key word is "in".

NC does not tax non-resident remote workers.  Remote work carried on from a California location is carried on in California, not in NC.

If you never physically worked in NC, your work income is not taxable by NC.

However, since NC taxes were incorrectly withheld from your pay, you must file a non-resident NC return, allocating zero income to NC, in order to obtain a refund of those taxes.

Wages and salaries are "sourced" where the work is actually performed, not where the employer is located.  If your work situation is still the same, you should ask your employer to cease withholding NC taxes from your pay. 

[acaral]

Hello TomD8,

i have the same situation but my employer make a mistake and withheld taxes from North Carolina last year. I am working remote from Florida.

My W-2 is showing taxes withheld in NC.

How can I file a tax return in NC to get this erroneously withheld money? 

[TomD8]

@acaral --

You must file a non-resident NC tax return on which you show the withheld NC taxes but allocate zero income to NC.  This will result in NC refunding the incorrectly withheld taxes to you.

[acaral]

Hello @TomD8,

i am trying to do this on TurboTax but is not letting me.

can you guide on how to do it?

[TomD8]

@acaral 

Add NC to your state tax returns.  Then follow the instructions in this TT help topic (the instructions say NY but they should work for any non-resident state):

How to enter New York State income as a nonresident in TurboTax (intuit.com)

[acaral]

Hey @TomD8 I think I found how to do it. Now the return is showing all the taxes withhelp erroneusly by my company.  

I have a last question, I could not fil emy taxes on time becuase the healthcare market had a unknown account wiht my information. I open a fraud case wiht them and it was resolve. They send me a 1095-a but is voided. How can I add this to my tax return?

[TomD8]

@acaral --

You don't add Form 1095-A to your tax return.  The IRS already has the information from the issuer of the form.   Just keep the form for your records.

[acaral]

I tried that and my return was rejected wiht this reason

Reject Code F8962-070

[TomD8]

@acaral --

This TurboTax help response tells you what to do to fix this:

How do I fix e-file reject F8962-070? (intuit.com)

Your return needs some information from your 1095-A, but you don't have to submit the actual 1095-A form.  Sorry for any confusion.

[acaral]

I did that but there is not option for voided 1095-A. The data I entered reduced my tax return by a lot.

[TomD8]

@acaral --

Perhaps contact the health insurance exchange for your state to obtain a valid 1095-A?

https://www.healthinsurance.org/faqs/where-do-i-find-my-1095-tax-form/

[acaral]

i have the voided 1095. I had to file a fraud claim because someone register me for marketplace insurance. They approved my claim and issue me a void 1095.

Before, doing the fraud claim, I tried to file my taxes, in March, and it got rejected because missing the 1095 form. That is how I find out that I had a insurance with the marketplace.

Do you know if the marketplace will send the new information to the IRS or the IRS will check a marketplace database?

[TomD8]

See What to do if I received a voided Form 1095-A in this IRS reference:

https://www.irs.gov/affordable-care-act/corrected-incorrect-or-voided-forms-1095-a