California tax return for non resident spouse

[NeoNap]

Hi,

Myself

1. I am US resident as well as resident of California for whole year. 

2. I have my income in US (w2, 1099 and investment income)

Spouse:

1. She is foreign national and staying in foreign. 

2. She is student and visited me once for 60 days in 2024

3. She has no income from US sources 

4. She has no income in foreign country as well

Federal Return choices:

1. We want to file MFJ

2. I have prepared return and choose mail filing as need to attach W7 for ITIN  and declaration page to treat my spouse as resident

Questions for California return:

1. Trubo tax automatically choose 540NR. Why? I am resident and it should choose resident reutrn, right? Is there any mistake I am doing while filing? 

2. Turbo tax has chosen MFJ for California return as well even though I have added no income for spouse. Should it be MFS? 

3. If it need to MFS, how can I make that change? 

4. Do I still need to file paper return for this as well?  

[DaveF1006]

First of all, if you are using Turbo Tax online, you should be able to file a Ca 540 resident return. The information from your federal return flow to your California return seamlessly. ‌If you chose to treat your wife as a resident for tax filing purposes in the federal return, this will populate into your California return.

If you sued the software, you may need to go to the forms mode in your software.  Go to the information worksheet and go to the main form and change the residency to a Form 540.  For some reason, Form 540 NR is always selected by default. 

You may file MFJ for both federal and state even if your wife does not have income. Aslo you will need to mail in the return because your wife does not have a ITIN or SSN and you are mailing the W7 with the return. This cannot be filed electronically.

Here is the screenshot on where to change the California state residency if you are using Turbo Tax software rather than the online version.

[NeoNap]

Hi,

Thanks for your response. I am using online version.

As I mentioned, I choose MFJ on federal return and elected to treat my spouse as resident for full year on federal return.

But when I started California return, it automatically chooses CA 540NR. Is that due to my spouse is non resident and I am filing MFJ ? 

[NeoNap]

Hi @DaveF1006 

appreciate your response in my situation. 

I have used online version of TurboTax and filed MFJ for federal and writing up a statement to consider my spouse as resident.

1. will I be preparing CA return as part year resident (540NR) or 540? 
2. If full year resident, how can I change it in online version where I am full year resident but my spouse is non resident with 0 worldwide income?

[DaveF1006]

No.  Since you said you were a California resident for the year, you would file a CA 540 resident return. As far as your wife, it doesn't matter to California if she has income or not. You may file jointly regardless to reap the benefits of filing Married Filing Jointly. Make sure in the PERSONAL INFO section that you say your wife is a non-resident alien. Then in the next screen, you will indicate you would like to treat a U.S. resident for the entire tax year and that this is the first year you are making the election. Look at the first two screenshots below.

Once you start your state return and answer questions, you are asked if you lived in California for the whole year and where your wife lived.  The next three screenshots will show how you should answer those questions. 

Here are the five screenshots I have mentioned and how you should answer these questions.

[NeoNap]

@DaveF1006 

Thanks for detailed respond. 

I have chosen same as you have mentioned above and completed state return. Turbotax still generated 540NR and not 540 for California. See below screens.

Seems like there is a bug in a software? 

[NeoNap]

@DaveF1006 

Is it because of this?    FTB publication 1031 :https://www.ftb.ca.gov/forms/2023/2023-1031-publication.pdf 

and this also talks same:Link 

[DaveF1006]

Yes, and thank you for sharing this. It's clear from Publication 1031 that if one resident wasn't a resident for the whole year, you will file a 1040 NR. ‌‌TurboTax did handle this correctly. 

Publication 1031