State Taxes - Residency

[kmc41]

I live in CA. My 21 year old son goes to school in Idaho. He lived most of 2020 in Idaho. In September he obtained an Idaho drivers license. All is wage earnings for 2020 we from Idaho. I am not going to claim him as a dependent. Does he have to file state taxes in both CA and ID this year or is he no longer considered a resident of CA and only has to file in ID?

[Hal_Al]

It's complicated. Another question has to be answered first: does he still qualify as your dependent?  The fact that you have elected not to claim him does not answer that question.  If he qualifies as you dependent, he is still a CA resident and must file as such. 

There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on him self.

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

Furthermore, there is a rule that says IF somebody else CAN claim him as a dependent, he is not allowed to claim himself. If he has sufficient income (usually more than $12,400), he can & should still file taxes. In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.  TT will check that box on form 1040.

[kmc41]

He does qualify as a dependent based on:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

So, he is a CA resident regardless of where he made his money? He has to file state taxes in CA, what about in ID?

[Hal_Al]

The general rule is: your report all your income on your home state return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state. He will have to file a non resident ID state return and pay ID tax on the income earned there.. He will also file a CA full year resident return and calculate tax on ALL his income. CA will give him a credit, or partial credit, for the tax he paid to ID. So, there will be little or no double taxation, but you have the cost and hassle of filing two state returns. Do the nonresident state return first.