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wbbagnall
New Member

Final paycheck from WA state being taxed by California?

Just got letter that I'm being taxed on my 2019 CA State Return. My final paycheck from Washington State was deposited into my bank account on 1/4/2019. I moved to California on 1/12/2019. Can California FTB tax that money even though I hadn't moved yet? I used Schedule CA 540 to subtract the pay amount when I submitted my return. They're saying I can't do that. Should I protest the additional tax amount they say I owe? 

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6 Replies

Final paycheck from WA state being taxed by California?

@wbbagnall what was reported by your employer on your W-2? was there CA income on the W-2? 

rjs
Level 15
Level 15

Final paycheck from WA state being taxed by California?

Did you file as a full-year resident (Form 540) or as a part-year resident (Form 540NR)? If you filed a full-year resident tax return, that would indicate that you were a California resident when you received the final paycheck, so it is subject to tax by California.

 

wbbagnall
New Member

Final paycheck from WA state being taxed by California?

There was no California income on my W2

wbbagnall
New Member

Final paycheck from WA state being taxed by California?

Yes, filed as a ca resident since we moved middle of January. However, I was paid before we even moved and established residency in California 

rjs
Level 15
Level 15

Final paycheck from WA state being taxed by California?


@wbbagnall wrote:

There was no California income on my W2


It doesn't matter. All of your income is taxed by the state that you live in, no matter where the income is from. And your resident tax return shows that you lived in California at the time that you received the income.

 


@wbbagnall wrote:

Yes, filed as a ca resident since we moved middle of January. However, I was paid before we even moved and established residency in California 


The FTB can't tell that you received the income before you became a California resident, because your tax return shows that you were a resident for the entire year. It does not show the date that you moved. So as far as the FTB is concerned, you were a resident when you received the income. You should have filed a part-year resident tax return, showing the date that you became a California resident. Then you would have been able to divide up your income between the nonresident and resident periods. You could have done this even though you were a nonresident for only a couple of weeks.

 

Maybe if you reply to the FTB notice explaining your mistake, they will let you amend your return to part-year resident instead of full-year resident. You have to decide whether the amount of tax you would save is worth the trouble. You can no longer amend a 2019 tax return with TurboTax.

 

Final paycheck from WA state being taxed by California?

@wbbagnall 

 

what probably occured is this:

 

the states get a data feed from the IRS a few years after the tax season ends, so CA knows what your 2019 AGI was from your federal tax return.  Since you stated you lived in CA "all year" (because of the form your filed), CA  expected the CA tax return to match the Federal Return.  It didn't.  Hence, the letter. 

 

There is a 4 year limit to claim a refund in CA.  So it is doable, if you can find the software to do it.  Depending on the complexity, maybe it can be done manually? 

 

https://www.ftb.ca.gov/help/disagree-or-resolve-an-issue/claim-for-refund.html

 

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