CA state tax, CASDI and moving expense

[User123120]

I started a new job in 2022, and the position is in CA. I received the moving expense lump sum payment from the company, but I didn’t move to CA in 2022, and worked completely remotely in another state. I’ve never been to CA physically in 2022 since I started my job. My W2 shows CA tax withholding and CASDI withholding.

1. Can I claim my CA tax withholding back? If so, how should I do this in Turbotax?
2. Can I claim my CASDI withholding back? If so, how should I do this in Turbotax?
3. Moving assistant company said I need to move to CA in one year since I started my job according to the IRS rule, but I can’t get more information about this rule. If for some reason, I don’t move to CA in 2023, what tax problem I have to deal with?
4. If my company ask me to pay back the moving expense lump sum money in 2023 after I file my federal tax return, but I have already paid the federal tax for this amount of money in 2022, how can I claim the paid tax back?

Thanks!

[User123120]

I have contacted the HR of my company to request a refund for the CASDI, but they refused to do so. Is there a way for me to get this money back? Thanks!

[SantinoD · Accepted solution]

In your case, you need to file a nonresident return for CA to recover the withholdings. On the nonresident return, declare earnings of $0 so you can get a full refund for the State income taxes your employer withheld. You should also tell your payroll department so they fix this in the future while you are still living away from CA.

1. So yes, you can get your state income tax withholdings back. As long as you enter the state income tax withheld from your W-2 into TurboTax, you will get credit for paying that and it will flow to the CA state tax return. (in your TurboTax program, click on the left panel "Wages and Income", and edit the W-2 you entered to review your entered state withholdings)
2. You can't claim SDI refund on your tax return. If your employer doesn't refund you, you have to file a claim for a refund with CA Franchise Tax Board. Go here for instructions: Help with refunds 
3. For years 2018-2025, there is no longer an income deduction for moving expense reimbursements, this may be the IRS law the moving assistant company is referring to. 
4. If you have to pay back the lump sum for moving expenses, there is no way to get a refund for the tax that you paid.

If you make sure your residency is entered correctly, TurboTax will guide you to be sure you get your CA state income tax refunded. 

This is how you should answer the residency questions for CA.  This will ensure you file a non-resident CA Tax Return with $0 CA income. When you get to the part to prepare your CA State Tax Return, when you get to this section below:

[User123120]

@SantinoD Thanks for your help!

Could you explain more about how to file a claim for a refund with CA Franchise Tax Board? Which form should I file? I don't have two employers in CA, ( I have one in CA (current) and one in the other state (previous)), so how should I claim this refund? Thanks!

[SantinoD]

You will have to file this Form : Claim for Refund of Excess California State Disability Insurance Deductions The instructions are included in this form on page 2. 

[User123120]

@SantinoD It seems I can't use this form since I only have one employer in CA, and my previous employer is not in CA, and I need to file my CA tax return to get my state withhold back, but I can't claim CASDI in my state tax return. So what else can I do to claim my CASDI? Thanks!

[DaveF1006 · Accepted solution]

In order to receive a refund for excess CASDI withholding, 

A valid State Disability Insurance (SDI) refund claim filed directly with the Employment Development Department (EDD) on this form must meet ALL of the following conditions:

1. Claimant worked for two or more employers subject to withholding California SDI. 

2. Deductions for California SDI were made from calendar year wages. 

3. Such deductions exceed the statutory limits. 

4. Claimant declares by signature to be exempt from California state income tax and not required to file a California state income tax return.

Other than these conditions listed, if you didn't meet this criteria, then you will not be able  receive a refund for excess CASDI. You also cannot claim a refund for a CASDI if you live in another state but according to the State of California, you may claim the benefits no matter what state you live in. Read more about that here.

@User123120