I work in CA and my husband works in NV (no state tax), when i entered his second W2, NV income only, our owed to CA taxes increased. Why would this happen?

[breez1011]

I am also confused as to why we owe CA so much more after having taxes taken out like normal all year. We are non residence of CA we live in NV, and all the information I've looked up for my CA income is saying I should not owe CA anything but my est right now is owing them over $150.

[TerryA · Accepted solution]

First, be sure you are preparing a nonresident Calif Form 540NR return.

The Calif nonresident/part-year return, Form 540NR, computes your income and tax as if you were a resident the entire year, then computes a net tax rate by dividing the total tax by total taxable income. Your California-source taxable income is then multiplied by that net tax rate to determine your California tax. You can see this on Form 540NR lines 31-37.

So you do report everything but towards the end of the interview (Nonresident Adjustments) is where you allocate the California-source income which is multiplied by the net tax rate. See Form 540NR, lines 31 - 42 and Schedule CA(540NR).

TT/Calif already knows about your CA wages and has probably already put that $$ in the Calif-source column of Sched CA(NR) Part II line 7 column E. Adding more income to the return will bump up the net tax rate described above and when multiplying that to your Calif wages it will increase your Calif tax liability. Use Forms Mode to see that happen as described above.