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Taxpayer exits California and establishes residency in Arizona. Spouse remains in California. How to file state returns?

Christopher
Level 1

Taxpayer leaves California in early November having worked there up until he establishes residence in Arizona where he obtained employment.

His spouse remains in California and works there.

From what I have researched, it seems this couple can file joint non-resident returns for both states.

Since both CA and AZ are community property states, all income will be reported on both returns, with AZ receiving a tax credit for taxes paid to California.

Please validate if this approach will work in Lacerte.  If so, what would be some suggestions.  

Would it make more sense (apart from the extra time) to file four married filing separate returns?

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George4Tacks
Level 15

Your approach will work. You will need to be careful doing the input to allocate ALL income (not just wages) to the portion of the year in each state, using Ctrl + E and splitting those items. 

MFS does not seem to cure any ills. It will incur costs for more returns and may generate a higher federal tax. You will need to play with all possibilities. Make the TP SSN all 9's to do the "play" returns and you will not incur REP fees. I would wait for the next release before committing too much time to the process. 


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George4Tacks
Level 15
Does taxpayer intend to return to CA? Is there a CA home owned?
We had a lot of this when GM and Ford closed and TP moved. I had some clients file as CA residents for years, even when the TP moved to MO, but worked in KS and the spouse stayed in CA. There were several credit paid to other state contortions to go through. See L on page 9 of https://www.ftb.ca.gov/forms/2016/16_1031.pdf

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George4Tacks
Level 15
@Christopher Any more input?  How about some comments over at https://accountants-community.intuit.com/questions/1788526-intuit-commercials-during-nfl-game-sunday  Join the party!!! put on a :tada: and come over

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Christopher
Level 1
Hi George.  Sorry for the delay.  Taxpayer does not intend to return to CA.  Yes, he and his spouse own a house in CA in which the spouse lives.
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George4Tacks
Level 15

Your approach will work. You will need to be careful doing the input to allocate ALL income (not just wages) to the portion of the year in each state, using Ctrl + E and splitting those items. 

MFS does not seem to cure any ills. It will incur costs for more returns and may generate a higher federal tax. You will need to play with all possibilities. Make the TP SSN all 9's to do the "play" returns and you will not incur REP fees. I would wait for the next release before committing too much time to the process. 


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abctax55
Level 15

This is the go-to resource for CA questions:

https://www.caltax.com/shop/publications/spidells-analysis-and-explanation-of-california-taxes-2019-...


(I wanna be a member of the pot stirring club too)
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