Moved from CA to TX. CA state tax question.

[288enzo]

The scenario is a little over halfway through the year we moved from California to Texas. I'm looking on the CA forms and I see calculations based on our total federal AGI. Why would CA have anything to do with our Texas earnings?

Out of curiosity I deleted the TX W2 and we went from owing CA $1,600 to getting a refund of $5,400 from CA. I ask again, why does our Texas income have anything to do with California?

[TerryA]

The Calif nonresident/part-year return, Form 540NR, computes your income and tax as if you were a resident the entire year, then computes a net tax rate by dividing the total tax by total taxable income. Your California-source taxable income is then multiplied by that net tax rate to determine your California tax. You can see this on Form 540NR lines 31-37.

So you do report everything but towards the end of the interview (Nonresident Adjustments) is where you allocate the California-source income which is multiplied by the net tax rate. See Form 540NR, lines 31 - 42 and Schedule CA(540NR).

On the screen titled Your California Tax Summary, your actual Calif taxable income is on the line, "Income After Nonresident Adjustment".

[288enzo]

I can see it and have digested the CA540NR form, but what I still don't understand is why CA bases any calculation off of what you earn in another state.  As an example for the first 6 months of the year I earn $120,000 in CA, then move to texas where I earn an additional $267,000 for the remainder of the 6 months in the year.  CA is now doing their magic off an AGI of $387,000 less deductions.  CA's calculation formula should not in any way include other income.  I think I'm looking for an answer that doesn't exist.

[TerryA]

California and several other states use the "worldwide" income method for nonresidents and part-year residents that you are seeing. That method does indeed produce a higher tax rate (540NR line 36) in most cases than otherwise would happen.

[one-of-three]

Be sure to file CA  540 nr NOT a 540

[Yanivr78]

I am in the same situation, I would suggest to use a real pro CPA because the guys here wont be able to give you a valid answer. They bow their heads to the thieves in CA. Just do the research through several CPAs until someone professional will sort it out for you. This is honestly soooooo wrong!