Taxed on RSUs in 2024 after moving in 2023

[Ozj123]

We moved from NC to CA in 2023. For our 2023 taxes we paid for the RSUs in both states. Now on our 2024 W-2, it shows that we have to pay taxes to NC again even though we were not residents there in 2024. Can this be correct? Would there still be amounts vesting that we have to pay for, even though we are now residents of another state?

[ThomasM125]

It is possible that the restricted stock units were granted when you worked in North Carolina but are vesting in 2024 after you have left. In that case, the state of North Carolina would have an argument that the income was earned while you lived there. 

The following from the North Carolina Department of Revenue states that the income would have to be derived from a business activity carried on in North Carolina and received in 2024, but it is not specific on when the income would have to be earned:

I suggest you contact your employer and request an explanation as to why your wages were assigned to North Carolina even though you did not work there in 2024.  They may have gotten confirmation from the state that it is taxable.

[Ozj123]

Employer said it was because they were granted when we were residents and until the grant is done (in a few years) we sill continue to pay taxes. Does TurboTax have a way to let us have the credit for California because we are paying taxes in North Carolina on it? Or do I need to go to a tax professional to file? Thank you!

[ThomasM125]

Yes, there is an Other State Tax Credit in California that will allow you to get credit for taxes paid to North Carolina if the associated income is also taxable in California. You will see an option for the credit when you go through the California return in TurboTax. You should prepare the North Carolina return first in TurboTax to make the credit calculation easier.