When will we need to put a number in "Amount if Different" when filing non-resident? Working and resident of VA, but worked a bit in CA. CA W2 only shows tax to CA.

[Nea]

This is when filling out the non-resident form for CA. Why is it showing the total income from CA and VA as income taxed by VA (when the CA W2 shows only CA taxed it)? Same with AGI. When would we need to put something in "Amount if Different" column?

[DanielV01 · Accepted solution]

What you see is correct.  While only CA tax was withheld from the income, it is actually Virginia who is taxing the income first.  Here's why:

California and Virginia have a hybrid reciprocal arrangement known as a "reverse credit".  Usually, when you live in one state but work in another, you pay tax first to the nonresident state, and then the resident state provides you a credit for the income tax you pay to the nonresident state on the resident tax return. 

A reverse credit arrangement works in the opposite direction.  In this case, Virginia (where you live) has the priority to tax all of your income, and on the California return you will claim a credit for the tax you pay to Virginia on the income earned in California.  Chances are that this allows you to receive most of the tax withheld as a refund.

You'll want to prepare the Virginia return first.  This way, the credit you claim for taxes paid to Virginia on the California return will transfer over.

[Nea]

I think the issue is that the "Income Tax Paid to VA" listed in the CA tax return does not match what the "Total VA Taxes" listed at the end of the VA state return. So where is that number coming from? I think this would clear up when we need to put something in "Amount if Different"

[DanielV01]

Virginia tax is not what is withheld, but rather what is the tax liability.  It is basically your withholdings minus your refund, or in addition to taxes you had to pay in.  California's credit, however, is the lesser of how much Virginia taxes the income versus how much California taxes the same income.  California's tax rate for that income may be lower than Virginia's.  If that is the case, the credit will be limited to California tax liability to bring your CA tax down to zero.