Arizona Non-resident Wages

[msuplita]

I work for a company in California but half the time I am working in Arizona. When on the clock in Arizona I actually get paid through an employment agency in Arizona. Both checks get California state income taxes withheld but neither have Arizona income taxes withheld. 

My understanding is I need to file a return in Arizona and I purchased Arizona. For the life of me I can't figure out why Arizona source income shows up as $0. There is no where in the walk through where it will allow me to indicate how much of my total wages came from Arizona.  I'm at an absolute loss. Please help.

[DianeC958]

Since all of the income on your W-2 is being reported as California income the program needs you to allocate the amount of income that needs to be taxed in Arizona.

If you indicated in the personal section that you made income in more than one state and you are preparing a non-resident return for Arizona, as you go through the screens the program will ask you how much income belongs to Arizona.

When you are preparing more than one state return, you need to prepare the non-resident return before you prepare the resident return.

Multiple States—Figuring What's Owed When You Live and Work in More Than One State

@msuplita

[msuplita]

@DianeC958  I appreciate your response. Unfortunately, this process still isn't working for me. I have confirmed that I indicated I made income in two different states in the personal section but the screen in the Arizona tax return section to indicate the amount that was Arizona sourced income doesn't give me a section to break out wages. 

I took a screen grab but it won't let me paste the image here. On the page, it says:

Enter the Arizona portion of each federal amount shown - Then the only option is:

'State Income Tax Refunds' which indicates a $0 federal amount. 

To your point about ensuring I do Arizona's return before I do California's, I started a new tax file to complete federal and Arizona before starting California. There was no change to the screen described above. When I complete the Arizona Return I get to a summary screen with the first lining being my Federal income and a second line indicating $0 for Arizona sourced income. 

I'm at a loss for where to indicate which wages were sourced in Arizona. 

[BillM223]

How were you paid by the employment agency? With a W-2 or 1099-MISC?

There are several screens asking about Arizona income (it depends on how many income items you have).

The 1099-MISC would probably show up as "Schedule C Business".

Like you and Diane, I would have expected there to be a screen in the Arizona interview that asked you what your Arizona wages were - and there's not.

However, I was able to force it by going to the W-2 and entering AZ in box 15 and your Arizona Wages in box 16. Of course, you would put nothing in box 17 (and I left the employer ID blank, too).

The amount in box 16 showed up on the Arizona return. I don't think it should work this way but it may be an adequate workaround.

[msuplita]

@BillM223  thank you for the response. I got a W2 so I would imagine you're work around would work. Seems very unfortunate to have to do that in this program for 1 and 2 I hate the idea of entering information in my income section that differs from my W2. 

However, it does sound like you might have the best work around after the countless hours I've gone through every page trying to solve this issue. 

[msuplita]

@BillM223 That didn't work. It threw an error on the federal smart check (which I could theoretically ignore) but it still doesn't show up on my Arizona return. 

[tictaxtoe]

Hi @msuplita,

Did you ever figure this out? I'm facing the exact same problem this year. Have been on hold for 1 hour with turbotax after I called them about it. Here's another post with the same issue

https://ttlc.intuit.com/community/state-taxes/discussion/re-missing-field-to-allo[product key remove...

[msuplita]

@tictaxtoe nope. Big joke... no help ever from anyone. I ended up filing Arizona on paper that year

[DMarkM1]

AZ and CA have a tax reciprocity agreeement.  If you are a resident of CA and worked in AZ, you do not pay any AZ taxes and AZ will not withhold any taxes.  You would only file in CA.  That is why there is no AZ withholding on your W2.  

Do not indicate on your return that you earned income in AZ.  

[tictaxtoe]

@DMarkM1thanks. I was a resident of WA for the entire year. During the pandemic I worked remotely from some other states. These states aren't listed on my W2 but I do owe tax to them.

[DMarkM1]

Possibly it depends on the laws of the state.  AZ for example, doesn't start taxing a worker until they have been in AZ more than 60 days.   Some states, like NY for example will tax a person for one day in the state.  

[tictaxtoe]

@DMarkM1I'm not sure the 60 days rule is correct. See the "Do you have to file" section on page 1 of the instructions here:

https://azdor.gov/file/12352/download?token=OCy03W1N

It looks like there is a 60 days exemption for withholding:

https://azdor.gov/businesses-arizona/withholding-tax/withholding-exceptions