I have a client that was transferred to Georgia at the beginning of 2019. She has an apartment and bought a car in Georgia. Her husband and three children live in their home in California and won't move to Georgia until all of kids are out of school. I'm not sure how to go about preparing this return.
Her gross income in box 1 of the W-2 is $299,365. The California income in box 16 is $156,326. The Georgia income in box 16 is $241,741. The math doesn't work but her company says income was apportioned and wouldn't necessarily match gross. Hmmm. California will of course want to tax the entire amount since her family and real estate is in California and there should be a tax credit for tax paid to another state. I guess I should file a non resident return for Georgia. Should I just ignore the California income in box 16 and then she will pay taxes on the gross plus have to pay Georgia taxes on the$241,741.
Am I making this more confusing than it is?
There is no way the State information on the W-2 is correct. While there are occasions where the State and Federal won't match (the State taxes something Federal does not, or does not tax something the Federal does tax), they should be fairly close. It is obvious the company is double-reporting some of the income for the States. They need to correct that. If they say they correctly apportioned it, tell them to SHOW you how it was apportioned; then they will realize their mistake.
It seems like the client is now a resident of Georgia, so I assume Georgia wants it filed it as a part-year Resident.
Where is it written that the two state numbers must add up to (at least close to) the federal amount? California requires reporting of nonresident income earned for services performed in California. Did she received a 2020 bonus based on 2019 work, after she moved to Georgia? Did she not return to California and work there some of the time after the move? (Seems likely that she would have stayed away from her family all the time.)
I hope they had a prenuptial so you don't have to worry about community-property issues.
I thought it was written in the IRS code ie: US resident citizen's pay tax on world wide income. If I earned $10000 in five states, then my w2 would show $ 50k in box 1. If all 5 states had income tax, then each state would show $10k income. As Bill said there may be slight differences if a state doesn't tax some income that fed does. By and large if your income is w2 wages the federal and state income should be close not a $98k difference
Internal Revenue Code has nothing to do with what California requires to put for state information on W-2 forms.
See FTB Pub 1017, page 6, question 17, and page 9, question 47. They probably have specific instructions on preparing W-2 forms -- someone else can find it.