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vivek-lokesh
Returning Member

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

 
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9 Replies
Hal_Al
Level 15

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

It doesn't matter where you earned the income. What counts is where your lived when you received the income.  If you worked for the same employer before and after the move, it depends on how the employer reported the income, by state, in boxes 15-17, of your W-2.
So, if you end up paying CA, you'll then have to file an amended return to get it back from IL
vivek-lokesh
Returning Member

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

I switched jobs twice in IL, until I finally moved to CA to work for a different employer in Oct 2015.

I made the mistake of not reporting the IL income in my 2015 tax return and IRS caught up to me eventually in 2017 for a penalty of $6.1K for which I've already paid and re-adjusted the income. The problem now appears that CA is coming after the same unreported income from IL, which they don't have any business claiming taxes on.

I hope they're wrong to want a piece of that income and I'm able to fight them off.

Thanks for your response though, hope I was able to make it clear.

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

Well CA is sooooo broke they are grasping at straws ... all you have to do is respond with proof the income was earned in IL ... you could start with a phone call to the number on the notice ... see if that will work.

If you purchased Audit Defense for your tax return, call Tax Resources, Inc. at (877)-829-9695, or report your notice on their web site at http://intuit.taxaudit.com/. Do not contact the IRS. Let Tax Resources contact them for you.

This is the membership email you should have gotten:  https://ttlc.intuit.com/questions/1901569-when-will-i-get-my-audit-defense-membership-kit

Also read the member agreement at this website -https://turbotax.intuit.com/corp/auditdefense.jsp


If you did not purchase Audit Defense:


TurboTax has a special phone number for help with IRS tax letters, which will be easier than going through regular Customer Support.   At the page below, click on the blue button that says "Get Help from TurboTax Support".  Then it will ask you what tax year is your letter.  Then it will ask you what the letter concerns. Then it will show you the phone number during posted business hours.

https://support.turbotax.intuit.com/irs-notice/audit-support/

Hal_Al
Level 15

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

You need  to not only show that you got the income in IL, you need to show that you paid IL tax on it. You may have to include a copy of your IL return, with your response to CA

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

"I made the mistake of not reporting the IL income in my 2015 tax return"
vivek-lokesh
Returning Member

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

Like I mentioned, I've already paid the penalty for that to IRS in 2017
Now what rights CA has to claim taxes on my IL W2 income, when it's been already re-adjusted with IRS?
Hal_Al
Level 15

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

You still have to deal with state taxes, in addition to what you paid the IRS.  I assume you also did not include the income on a 2015  IL return. In the case of part year residency, both states will come after you, unless you can show you paid the other state. Since you can not prove that you paid IL tax on that income, CA is going to be aggressive.
vivek-lokesh
Returning Member

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

Fortunately, I did file the IL tax return for the year 2015, but the only problem is I didn't report it on my federal return for the same year.

It's been re-adjusted with IRS about a year and a half ago. But now CA FTB appears to be coming after that re-adjusted income with IRS for the year 2015.
I believe they are not aware at this point that the income was earned prior to moving to CA.

I’ve been hit by FTB’s notice of proposed reassessment on my 2015 W2 including my income that I made in Illinois, prior to moving to California in October that same year

SO you have a choice.

Get a local tax professional to help you deal with it...or try to file an amended CA part-year tax return that does not include the additional IL income as a part of it's CA part-year allocation...but does include the IL income as a part of your total income for the year, then pay CA the increased taxes you "might" owe them.  (a lot depends on whow much that missing IL income is, and what tax bracket you are in for CA taxes)

What I mean by that is that most state's part-year tax returns will base the %tax rate on your total income for the year , even if they only tax the income earned in that state while you were resident there.  Thus if you earned $1billion in IL, and $10,000 in CA, then CA will only tax that $10,000 part-year CA income, but they will tax it at their highest progressive tax rate because your earned $1billion+10,000 total for the year.   SO the additional IL income added may...or may not increase your CA tax rate....and you might owe them more for that alone.   In addition, you will need to show them that it was IL and not CA income in the first place. So you do have some tax reporting work to do with the CA FTB to clear it up.  Whether you can do that yourself, or thru a tax professional is up in the air at this point.

 The same situation apparently doesn't apply to IL if, as you say, you've already included all that income on your IL part-year tax return........or if you didn't include that other IL income on the IL tax return, you'll have some work to do there too....but since IL uses a flat tax, the CA income level is likely to be fairly immaterial.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
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