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I am filing a Ca non-resident (540NR). My residence ...

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I am filing a Ca...
I am filing a Ca non-resident (540NR). My residence is Indiana. I know I can claim a credit but am having a hard time trying to figure out how I extract that credit from my In state taxes.
Submitted: 10 years ago.Category: Tax
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2/16/2007
Tax Professional: Lev, Tax Advisor replied 10 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
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If you was a non-resident of CA for all year - you will be responsible for taxes for income from CA sources only.

You will not receive a credit from CA for taxes paid to other states.

You will receive a credit for local taxes paid outside Indiana - see page Schedule 1 on the page 27 - http://www.in.gov/dor/taxforms/06pdfs/06-it40bk.pdf

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Customer reply replied 10 years ago
Reply to Lev's Post: "If you was"?? What horrible English.

'Enter the income tax liability net of all other credits paid to the other state' is where I need help. Refer to Ca Schedule S instructions --- Line 7.

I was a part year non-resident of Ca.

Thank you.
Tax Professional: Lev, Tax Advisor replied 10 years ago

You may claim this credit if are filing as a part year resident of CA - http://www.ftb.ca.gov/forms/06_forms/06_540s.pdf

Assuming you had income from Indiana for the same time and paid Indiana state income tax as a non-resident - you should allocate Indiana income and Indiana taxes to the time you was a resident of CA and to the time your was a resident of IN - this income is not separated on your Indiana tax return.

The Indiana income for the time you was a resident of CA is reported in the Part I and the Indiana income tax for the time you was a resident of CA is reported on the 7 Ca Schedule S.

You may prorate based on the time the income was received or based on the time of residency. For instance, your total Indiana income was $30,000 and total Indiana tax amount - $1500. Your was CA resident for 150 days and IN resident for the rest of the year. Your Indiana income and taxes would be allocated as 150/365 = 41% and 59%.

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Customer reply replied 10 years ago
Reply to Lev's Post: Why are you stating part time resident of Ca. My initial question states I am filing Ca non-resident and I am a resident of Indiana. Therefore, I am allowed a credit towards my Ca 540 NR via a Schedule S for the tax liability I paid in Indiana. I fall under General / Part D of the link you sent me.

I don't believe I have to divide up my days between Ca and Indiana. My W-2 already has diced up what income was taxed and where.
Customer reply replied 10 years ago
In other words, read my previous response concerning how to calculate Line 7 of schedule S. (i.e. Take line xx and subtract line yy from my IN IT-40 and add the amount your are paying on your Indiana refund). I know it's something like that.

Thanks.
Tax Professional: Lev, Tax Advisor replied 10 years ago

You actually stated above - "I was a part year non-resident of Ca"

In my understanding - this mean that you was part year resident and part year non-resident. Please clarify.

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Customer reply replied 10 years ago
Reply to Lev's Post: part year non resident of Ca
Customer reply replied 10 years ago
I"m currently using turbo tax. There is just one question I'm not 100 % sure about on my Ca 540NR..'Enter Indiana Income Tax paid'. When reading the supporting documentation, I believe it means more than just the income tax paid to In that is shown on my W-2. Matter of fact, turbo tax asks me to enter the income tax paid to In from my return. When reading the supplemental information, it says exclude county tax. Therefore, I think it's what I've 'already' paid as shown on my W-2, plus what I owe after completing the In state minus any other credits like county tax and penalty (from previous year).
Tax Professional: Lev, Tax Advisor replied 10 years ago

there is no such status as "part year non resident of Ca"

  • Please verify in which states did you live during 2006.
  • Did you live the whole year in Indiana?
  • Did you live any part of the year in CA?

We need to clarify these issues before moving further...

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Customer reply replied 10 years ago
My permanent residence is Indiana. I have not moved.

I staye in a hotel out in Ca on business from 1/1/06 to 9/1/06 but made weekend trips back to Indiana.
Customer reply replied 10 years ago
I am using turbo tax and by answering there questions, they are filling out a 540NR. I guess that makes me a non resident as opposed to part resident.
Tax Professional: Lev, Tax Advisor replied 10 years ago

Residents of California may claim a credit only if the income taxed by the other state has a source within the other state under California law.

No credit is allowed if the other state allows California residents a credit for net income taxes paid to California. Nonresidents of California may claim a credit only for net income taxes imposed by and paid to their states of residence and only if such states do not allow their residents a credit for net income taxes paid to California.

As a resident of Indiana you are you will receive a credit for local taxes paid outside Indiana - see page Schedule 1 on the page 27 - http://www.in.gov/dor/taxforms/06pdfs/06-it40bk.pdf and you are not allowed the California credit for the income taxed paid to the other state.

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Customer reply replied 10 years ago
Reply to Lev's Post: Why do you keep referring to 'Ca resident'. I've told you many times, I am not a Ca resident and was not.

I am a resident of Indiana and I paid Ca state taxes, not Ca local taxes.
Tax Professional: Lev, Tax Advisor replied 10 years ago

I am not referring to you as a CA resident - the credit you were asking for is mainly for CA residents.

California nonresident individuals, estates, or trusts that are residents of one of the following states or U.S. possessions and paid a net income tax to that state or U.S. possession on income that is also taxed by California may claim the other state tax credit: Arizona, Guam, Indiana, Oregon, and Virginia. Note: California nonresidents who are residents of any state or U.S. possession not listed may not claim this credit.

As the income from CA is taxable in Indiana - you should allocate Indiana income taxes to the CA income - this amount is not separated on your Indiana tax return.

You may prorate based on the total income and CA income. For instance, your total income was $30,000 and CA income $4500 - that is 15%, If your total Indiana tax amount is $2000 - the Indiana taxes allocated to CA income will be $2000*15%=$300.

You may verify this information by calling CA Franchise Tax Board -(NNN) NNN-NNNN/p>

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