I earned 0 wages in CA but my W4 and W2 show a split between CA and NY. Should be 100% NY. How do I adjust this in turbotax?

[VolvoGirl]

Does your W2 have CA withholding in box 17?

[raymoooon]

Yes, the number in box 17 includes withholding from both CA and NY.

[raymoooon]

In the summary section of my W2, under State and Local, there is a column for TAX, which include CA, NY, and NYC. I have the total of all 3 under the TOTAL STATE W2, and then separated out in separate CA, NY, and NYC.

[rjs]

Form W-4 is a federal form. It does not show anything about the state. Also, Form W-4 does not show your wages.

If it's true that you did not earn any wages in California, then your W-2 is wrong. You cannot adjust it on your tax return. Ask your employer for a corrected W-2.

If you worked in New York all year, and did not work in California at all, how did California get involved? What is your connection with California? Are there some details about your work situation that you haven't told us? Did you spend some time in California, even though your employer was located in New York?

[raymoooon]

 So California is only involved because I lived in CA in 2021, but began living in NY in 2022. My employer completes the W2 based on address information that I provide for them. I forgot to update my address until later in the year, so the income was split between the two. I have work schedules to show full time NY residence and work for the full year 2022.

[rjs]

"began living in NY in 2022"

The state that your wages are from is determined by where you work, not where you live. When exactly did you start working in New York? Unless you worked in New York beginning January 1, you would have some California wages on your W-2.

When exactly did you move to New York? Your income is subject to tax by the state that you live in, no matter where the income is from. Unless you lived in New York starting on January 1, you will have to file part-year resident tax returns in both states.

While you obviously should have promptly notified your employer that you had moved, I would think that your employer knows what company location you are working at, and records your wages accordingly. If you worked in New York, your wages were New York wages, no matter where you lived.

In any case, if your W-2 is incorrect based on where you worked, the best solution is to get a corrected W-2 from your employer. It would be very difficult to try to convince either state that your actual wages in the state are different from what's shown on your W-2.

[dmertz]

There seems to be nothing to adjust.  If you were not a resident of California in 2022 you would file a California nonresident tax return to get back the withholding mistakenly paid to California and you would pay whatever balance is due to New York with your New York tax return.

[TomD8]

There is no point is asking your employer for a corrected 2022 W-2 at this point in time.  That ship has sailed. That's because your employer long since deposited those withheld taxes with the respective states.  So your W-2 is correct as is; it shows what your employer actually did.

As @rjs said, if you moved during the year 2022, then for 2022 you would file as a part-year resident of each of the two states, entering your W-2 as is.

If instead you were living in and working only in New York as of January 1, 2022, you would do as @dmertz says: file a non-resident CA return allocating zero income to CA; and file a resident NY return.  Enter your W-2 as is for both states.

In either case CA will refund any excess taxes withheld.  You will have taxes due to NY.

[rjs]

My concern is that California is not going to smoothly process the nonresident return as filed and refund all of the California withholding. A California nonresident return showing zero California income, when the W-2 shows significant California income, will almost certainly result in a letter from the FTB saying that the California income was not reported correctly on the tax return. That will delay the refund and require correspondence with the FTB to try to convince them that the W-2 is wrong. Without any evidence other than the taxpayer's say-so, it will be hard to make that case. A letter from the employer saying that the California wages on the W-2 are a mistake would certainly help, if the employer is willing to provide such a letter.

[TomD8]

My approach would be a bit different.  If indeed you neither lived in nor worked in CA in 2022, I would go ahead and file a non-resident CA return showing zero CA income for that year.  That would be a valid return and would reflect the actual situation.

If (and only if) your return is questioned by the CA FTB, I would respond with your own explanation and a copy of your 2022 full-year resident NY tax return.  IMO that would be the most acceptable proof that you were a full-year NY resident in 2022.  Letters from an employer can be hard to come by.

Your situation isn't that unusual.  Employers make withholding mistakes all the time when their employees move from one state to another.

[raymoooon]

Full Details and this is where it gets complicated:

I'm a pilot who moved out of AZ 8/30/21. Began flying out of my NY base 9/1/21.  I have been renting a "crash pad" but spent almost all my time in NY. I switched my address with my employer sometime mid-year 2022 after realizing I definitely exceeded NY's 184 day threshold. If anything - I think I should be filing an amended 2021 CA NR return to reflect that I was not working/living in California, and file a return for NY for 2021. 

As for this year, I'll file CA NR, and full-year NY resident. Not totally sure how to do this in turbotax yet, but i'll look into that now.

[rjs]

It's not clear when, if ever, you stopped being a California resident. The California Franchise Tax Board has a publication that explains how to determine whether you are a California resident for income tax purposes, FTB Publication 1031, 2022 Guidelines for Determining Resident Status. The rules are very complicated. Note that the FTB publication has a section specifically for airline employees, and a section on leaving California.

Note that, since each state has its own definition of a resident, it is possible to be considered a resident of more than one state at the same time. So meeting the New York definition of a resident does not necessarily mean that you are no longer a California resident. The concept of domicile affects the definition of a resident, and is discussed in the FTB publication. While it's possible to be a resident of more than one state, you can have only one domicile at a time. You have not given enough information to evaluate where your domicile is or whether it has changed. The address that you give your employer does not, by itself, establish either residence or domicile.

A "crash pad" does not sound like a domicile or a "permanent place of abode," which is part of the New York definition of a resident.

Since your situation is complex, you might want to consult a local tax professional.

You would have gotten more useful answers if you had posted the "Full Details" from the start, instead of oversimplifying the situation.

[dmertz]

I agree with rjs that it's not clear that you were never a California resident in 2022.  If you did not timely change to a New York driver's license or change the address on your pilot's license, it might be hard to establish that you were not a California resident at least part of 2022.  If failing to change your address with the employer near the beginning of 2022 was not simply an oversight, it's doubtful that you were a New York resident at the beginning of the year.  If you were actually a resident of California early in the year and changed your state of residence later in the year, you would file part-year resident returns with both states and would likely have a tax liability to both states.

[raymoooon]

According to California's Airline Employee rules I would not be considered a NY resident.