US Citizen living abroad with rental property in California - unable to exclude foreign earned income in 540NR

[yeestudio]

Hi,

I moved out of California 5 yrs ago and have not been back to California since then.  My California income is solely rental income from my California property.   Correct?

I am using the Turbo Tax Premier Desktop version.  I am having trouble with my 540NR return.  I followed the wizard and answered the questions: 

1. domicile - Foreign Country

2. days spent in CA for any purpose - zero

Question - in the below screen - it is asking about my W-2 wages - the amount is the wages I earned aboard. how come it only has a question - but no input field for me to enter 'zero'?  Therefore, it is not deducting this from my CA return as CA adjustments (540NR, line 14).  Similar issue for my interests/dividends and capital gains.

How can I correct this?  

[ErnieS0]

Yes. TurboTax should give you a box to enter the amount of W-2 income you earned in California.

You can enter the amount in Forms mode.

1. Tap Forms in the top right corner
2. If you are on the screen you showed, TurboTax should take you to Sch CA (540NR). Otherwise, find Sch CA (540 NR) in the left column and tap
3. Go to Part II, line 1a, Column E (California amounts) and enter $0
4. Tap Step-by-Step where Forms used to be to go back to the interview mode

[yeestudio]

Hi Ernie,

Thank you for your reply.  That part is good - zero on line 1a for Column E. 

One more thing to confirm:

Should Column D includes all Fed income (interests, dividends, capital gain, rental, etc) as well as foreign earned income? It seems that in the 2022 version - Column D of 8d is greyed out (not included in the total calculation), while the previous year's version will calculate depending on how I put in the value (could be wrong)! 

I found this article that seems to explain that it should be included.  (https://ttlc.intuit.com/community/tax-credits-deductions/discussion/is-foreign-earned-income-taxable...).

In 2022 - Turbotax is not adding the foreign earned income in Column D's total.  Is that a new rule or always should be like this?

Thank you in advance.

[ErnieS0 · Accepted solution]

I have an add-back in Column C. I'm unsure why your Column is reading $0. TurboTax does add the excluded income on line 1h.

The foreign earned income exclusion is a federal tax break. You are correct that it does not apply to California.