CA State taxes tiny amount of income

[mulliganplummer]

My wife and I live in Colorado. My wife was part of a lawsuit against her ex-employer, she got about $800. The letters look like W2's but in the state section, it says CA. Is there a minimum amount of income in CA to warrant filing a CA state tax form? Do we need to do one for about $800 in income?

[ErnieS0]

Probably. California requires a nonresident to file if ether their gross income or adjusted income is above certain limits.

Here are California's filing thresholds:

For more info see: Part-year resident and nonresident

[mulliganplummer]

So since we made a lot more than that in Colorado,  we need to file state income taxes in California. California can’t tax me more that the $800 income from a settlement? Or can they. We don’t even live in CA.

[mulliganplummer]

Is this total income or just CA income? My wife told me the amount is less that $400. So basically we made $400 after taxes in CA.

[DMarkM1]

Since your gross income exceeds the limits you will need to file non-resident in CA.  CA uses your federal adjusted gross income from all sources to figure the CA tax on CA source income.  You will be taxed by CA on a percentage of your total income.  Here's the way it works.

CA starts with your FED AGI and then makes CA additions and subtractions to arrive at a CA total income.  Your allocated CA income is divided by the CA total income to arrive at a percentage.  The tax on that CA total income is then multiplied by the income percentage to arrive at the CA tax on your CA allocated income.

For example.   FED AGI- 20,000, no CA additions or subtractions so CA total income is 20,000.  CA allocated income- 2,000.  2000/20000 = .1.  CA tax on 20,000 is $100 x .1 = CA tax on CA allocated income- $10.

In the "My info" section scroll down to "Other State Income"  select "Yes" and "CA" from the dropdown menu.  This will generate the CA non-resident return.

Once you have entered everything in the federal interview you should complete the CA non-resident return first and take note of the income and tax on the CA income.  You will use those numbers to complete your CO resident return.

Your resident state taxes on all income from all sources so you will claim a credit for taxes paid to another state on your CO return to mitigate the double taxation.