AZ & CA Income

[Gary]

I have a client that moved to AZ in 2010 and has only AZ income for 2012. His wife lived in CA until October when she was laid off and then moved to AZ. All her wages were from CA. However, her severance pay was received after she moved to AZ. Her W-2 included the severance pay for federal income. Her total income including the severance pay was attributed to CA and the severance pay was also attributed to AZ. CA & AZ don't have credit for taxes paid to the other state.

A second question. What filing status do I use on each state. Since they are filing MFJ on the Federal return, it doesn't seem like full year, part year or non=resident will work for either state.


Any help is appreciated.

[Gary2]

CA & AZ don't have credit for taxes paid to the other state.

Yes they do, it's just backwards from the usual rules. The non-resident state gives a credit for taxes paid to the resident state.

A second question. What filing status do I use on each state. Since they are filing MFJ on the Federal return, it doesn't seem like full year, part year or non=resident will work for either state.

The state instructions are usually pretty clear on this, or check the State edition of the TTB.

[Koss]

California

Your client may be able to claim the Foreign Tax Credit on Form 1116.

Because when you cross over into California, you might as well be in a different country.

BMK

This post is a satire.