RSUs - Two States

[blatsnorf]

I have RSUs that were granted in CA and since then I've moved to OR.  California still wants to tax these RSUs as does Oregon.  My employer has done a calculation based on when I moved to OR vs grant date to calculate a percentage that is owed to CA and a percentage that is owed to OR.

OR taxes 100% and has an agreement with CA where I can request a refund from CA.

Two problems:

1)  I tried entering the info on the CA state return in TurboTax for the RSUs, but TurboTax calculates only 66% of the tax paid to CA coming back.  That other 33% still seems like double taxation and isn't a small amount.  Am I entering this int he wrong place?

2) The withholding process sets it up so that I get a huge refund from CA and end up owing a similar amount in OR.  What can I do to avoid this?  I don't want to 'give CA a free loan' and I don't want to then also have to pay estimated taxes to OR.

[RobertB4444]

California taxes all California source income.  Period.  There isn't an exception to this.  

Oregon taxes all the income you earn as a resident.  But if you file your resident return in Oregon and they tax your RSUs then you are entitled to a credit for taxes paid on that money on your California non-resident return.  Meaning that California can still tax anything that has already been taxed by Oregon, but they are only entitled to have you pay the tax if the California tax rate is higher than Oregon's (which it probably is).  So, the portion that you're paying to California that they are keeping is probably money that they are entitled to due to their tax rate.

Making a free loan to California is the only way to get the refund from California that you're entitled to.  On the upside, this is the only time you'll have to deal with this situation.

@blatsnorf

[blatsnorf]

@RobertB4444 

>Meaning that California can still tax anything that has already been taxed by Oregon, but they are only entitled to have you pay the tax if the California tax rate is higher than Oregon's (which it probably is).  So, the portion that you're paying to California that they are keeping is probably money that they are entitled to due to their tax rate.

The highest applicable CA tax rate is 8.0% and some of it should only be taxed at 2.0%.  The applicable OR tax rates are 8.75 and 9.9%.  If it were the other way around then I might understand that CA would still keep the difference, but in this case the OR rates are definitely higher.  There is also the matter that the taxes paid were 10.7%.  I'm still not seeing why I wouldn't be entitled to all of it back.

>Making a free loan to California is the only way to get the refund from California that you're entitled to.  On the upside, this is the only time you'll have to deal with this situation.

I'm begrudgingly coming to the same conclusion, but it's worth noting that I will have to do this for the next three years, too.  CA claws back on RSUs based on when they were granted and not when they vest.  After four years one gets outside the window where this occurs.

[blatsnorf]

(What happened to the other replies?)