Are the following four examples in the attachment word document correct regarding a California tax return for an MFJ couple where the taxpayer is a full-year CA resident and the spouse is a full-year nonresident? Since the spouse is a Ca nonresident, they file a Ca nonresident 540NR tax form.
Notes:
1] Interest generally has a source where the taxpayer is a resident.
2] Income from intangible personal property generally has a source where the owner resides.
Example 1: Both people live in community property states. They earned $800 in a joint CA account (Ca source interest). They each receive one-half ($400) of the interest.
Taxpayer: Ca resident
a) The $400 interest is Ca-source income since the taxpayer is a Ca resident.
1] Since Ca is a community property state, the AZ-resident spouse receives $200 of this Ca-source
income and it must be included on the Ca return.
2] The taxpayer’s remaining $200 is taxable in Ca.
Spouse: AZ resident
a) The $400 interest is AZ-source income since the taxpayer is an AZ resident.
1] Since AZ is a community property state, the CA-resident taxpayer receives $200 of this AZ-source
income and it must be included on the Ca return since it is world-wide to the Ca-resident taxpayer.
2] The spouse’s remaining $200 is not taxable in Ca as it is AZ-source income
Total Ca taxable interest in Column E: $600 as shown in the CA(540NR) figure below.
California Nonresident Form CA (540NR) – Adjustments
Example 2: The taxpayer lives in a community property state and the spouse lives in a separate property state.
They earned $1000 in a joint CA account (Ca source interest). They each receive one-half ($500) of the interest.
Taxpayer: Ca resident
a) The $500 interest is Ca-source income since the taxpayer is a Ca resident.
1] Since Ca is a community property state, the MT-resident spouse receives $250 of this Ca-source
income and it must be included on the Ca return.
2] The Ca-resident taxpayer’s remaining $250 is taxable in Ca.
Spouse: MT resident
a) The $500 interest becomes MT-source income since the taxpayer is an MT resident.
1] Since MT is a separate property state, the CA-resident taxpayer receives $0 of this MT-source
income.
2] The spouse’s $500 is not taxable in Ca as it is MT-source income
Total Ca taxable interest in Column E: $500 as shown in the CA(540NR) figure below.
California Nonresident Form CA (540NR) – Adjustments
Example 3: Both people live in community property states. They earned $200 capital gains (intangible) in a joint CA account (Ca source income). They each receive one-half ($100) of the income.
Taxpayer: Ca resident
a) The $100 interest is Ca-source income since the taxpayer is a Ca resident.
1] Since Ca is a community property state, the AZ-resident spouse receives $50 of this Ca-source
income and it must be included on the Ca return.
2] The Ca-resident taxpayer’s remaining $50 is taxable in Ca.
Spouse: AZ resident
a) The $100 interest is AZ-source income since the taxpayer is an AZ resident.
1] Since AZ is a community property state, the CA-taxpayer receives $50 of this AZ-source income
and it must be included on the Ca return since it is world-wide income to the Ca-resident taxpayer.
2] The spouse’s remaining $50 is not taxable in Ca as it is AZ-source income
Total Ca taxable interest in Column E: $150 as shown in the CA(540NR) figure below.
California Nonresident Form CA (540NR) – Adjustments
Example 4: The taxpayer lives in a community property state and the spouse lives in a separate property state.
They earned $400 capital gains (intangible) in a joint CA account (Ca source income). They each receive one-half ($200) of the income.
Taxpayer: Ca resident
a) The $200 income is Ca-source income since the taxpayer is a Ca resident.
1] Since Ca is a community property state, the MT-resident spouse receives $100 of this Ca-source
income and it must be included on the Ca return.
2] The taxpayer’s remaining $100 is taxable in Ca.
Spouse: MT resident
a) The $200 interest becomes MT-source income since the taxpayer is an MT resident.
1] Since MT is a separate property state, the CA-resident taxpayer receives $0 of this MT-source
income.
2] The MT-resident spouse’s $200 is not taxable in Ca as it is MT-source income
Total Ca taxable interest in Column E: $200 as shown in the CA(540NR) figure below.
California Nonresident Form CA (540NR) – Adjustments
Notes:
1] Interest generally has a source where the taxpayer is a resident.
2] Income from intangible personal property generally has a source where the owner resides.
Example 1: Both people live in community property states. They earned $800 in a joint CA account (Ca source interest). They each receive one-half ($400) of the interest.
Taxpayer: Ca resident
a) The $400 interest is Ca-source income since the taxpayer is a Ca resident.
1] Since Ca is a community property state, the AZ-resident spouse receives $200 of this Ca-source
income and it must be included on the Ca return.
2] The taxpayer’s remaining $200 is taxable in Ca.
Spouse: AZ resident
a) The $400 interest is AZ-source income since the taxpayer is an AZ resident.
1] Since AZ is a community property state, the CA-resident taxpayer receives $200 of this AZ-source
income and it must be included on the Ca return since it is world-wide to the Ca-resident taxpayer.
2] The spouse’s remaining $200 is not taxable in Ca as it is AZ-source income
Total Ca taxable interest in Column E: $600 as shown in the CA(540NR) figure below.
California Nonresident Form CA (540NR) – Adjustments
| Part I Residency Information | |||||||||||||
| During 2019 | |||||||||||||
| 1 My California Residency (check one) | |||||||||||||
| a myself | Nonresident | Part-Year Resident | X | Resident | |||||||||
| b Spouse | X | Nonresident | Part-Year Resident | Resident | |||||||||
| Yourself | Spouse/RDP | ||||||||||||
| 2a I was domiciled in (enter two letter code) | CA | AZ | |||||||||||
| 5 I was a CA resident the entire year (enter state of residence) | CA | AZ | |||||||||||
| 6 The number of days I spent in CA for any purpose was: | 365 | 0 | |||||||||||
| 7 I owned a home/property in CA (Enter Y for yes, N for no) | N | N | |||||||||||
| PART II Income Adjustment Schedule | A | B | C | D | E | ||||||||
| Section A – Income | Federal Amounts (Taxable amount from your Fed Tax Rtn) |
Subtractions (difference between Ca & Fed law) |
Additions (difference between Ca & Fed law) |
Total amounts using Ca law as if you were a Ca resident (Subtract col B from col A; add col C to the result) | CA amounts (Income earned or rcvd as a Ca resident and income earned or rcvd from Ca sources as a nonresident) |
||||||||
| 1 Wages, salaries, tips, etc | |||||||||||||
| 2 Interest income | 800 | 800 | 600 | ||||||||||
They earned $1000 in a joint CA account (Ca source interest). They each receive one-half ($500) of the interest.
Taxpayer: Ca resident
a) The $500 interest is Ca-source income since the taxpayer is a Ca resident.
1] Since Ca is a community property state, the MT-resident spouse receives $250 of this Ca-source
income and it must be included on the Ca return.
2] The Ca-resident taxpayer’s remaining $250 is taxable in Ca.
Spouse: MT resident
a) The $500 interest becomes MT-source income since the taxpayer is an MT resident.
1] Since MT is a separate property state, the CA-resident taxpayer receives $0 of this MT-source
income.
2] The spouse’s $500 is not taxable in Ca as it is MT-source income
Total Ca taxable interest in Column E: $500 as shown in the CA(540NR) figure below.
California Nonresident Form CA (540NR) – Adjustments
| Part I Residency Information | |||||||||||||
| During 2019 | |||||||||||||
| 1 My California Residency (check one) | |||||||||||||
| a myself | Nonresident | Part-Year Resident | X | Resident | |||||||||
| b Spouse | X | Nonresident | Part-Year Resident | Resident | |||||||||
| Yourself | Spouse/RDP | ||||||||||||
| 2a I was domiciled in (enter two letter code) | CA | MT | |||||||||||
| 5 I was a CA resident the entire year (enter state of residence) | CA | MT | |||||||||||
| 6 The number of days I spent in CA for any purpose was: | 365 | 0 | |||||||||||
| 7 I owned a home/property in CA (Enter Y for yes, N for no) | N | N | |||||||||||
| PART II Income Adjustment Schedule | A | B | C | D | E | ||||||||
| Section A – Income | Federal Amounts (Taxable amount from your Fed Tax Rtn) |
Subtractions (difference between Ca & Fed law) |
Additions (difference between Ca & Fed law) |
Total amounts using Ca law as if you were a Ca resident (Subtract col B from col A; add col C to the result) | CA amounts (Income earned or rcvd as a Ca resident and income earned or rcvd from Ca sources as a nonresident) |
||||||||
| 1 Wages, salaries, tips, etc | |||||||||||||
| 2 Interest income | 1000 | 1000 | 500 | ||||||||||
Taxpayer: Ca resident
a) The $100 interest is Ca-source income since the taxpayer is a Ca resident.
1] Since Ca is a community property state, the AZ-resident spouse receives $50 of this Ca-source
income and it must be included on the Ca return.
2] The Ca-resident taxpayer’s remaining $50 is taxable in Ca.
Spouse: AZ resident
a) The $100 interest is AZ-source income since the taxpayer is an AZ resident.
1] Since AZ is a community property state, the CA-taxpayer receives $50 of this AZ-source income
and it must be included on the Ca return since it is world-wide income to the Ca-resident taxpayer.
2] The spouse’s remaining $50 is not taxable in Ca as it is AZ-source income
Total Ca taxable interest in Column E: $150 as shown in the CA(540NR) figure below.
California Nonresident Form CA (540NR) – Adjustments
| Part I Residency Information | |||||||||||||
| During 2019 | |||||||||||||
| 1 My California Residency (check one) | |||||||||||||
| a myself | Nonresident | Part-Year Resident | X | Resident | |||||||||
| b Spouse | X | Nonresident | Part-Year Resident | Resident | |||||||||
| Yourself | Spouse/RDP | ||||||||||||
| 2a I was domiciled in (enter two letter code) | CA | AZ | |||||||||||
| 5 I was a CA resident the entire year (enter state of residence) | CA | AZ | |||||||||||
| 6 The number of days I spent in CA for any purpose was: | 365 | 0 | |||||||||||
| 7 I owned a home/property in CA (Enter Y for yes, N for no) | N | N | |||||||||||
| PART II Income Adjustment Schedule | A | B | C | D | E | ||||||||
| Section A – Income | Federal Amounts (Taxable amount from your Fed Tax Rtn) |
Subtractions (difference between Ca & Fed law) |
Additions (difference between Ca & Fed law) |
Total amounts using Ca law as if you were a Ca resident (Subtract col B from col A; add col C to the result) | CA amounts (Income earned or rcvd as a Ca resident and income earned or rcvd from Ca sources as a nonresident) |
||||||||
| 1 Wages, salaries, tips, etc | |||||||||||||
| 2 Interest income | 200 | 200 | 150 | ||||||||||
They earned $400 capital gains (intangible) in a joint CA account (Ca source income). They each receive one-half ($200) of the income.
Taxpayer: Ca resident
a) The $200 income is Ca-source income since the taxpayer is a Ca resident.
1] Since Ca is a community property state, the MT-resident spouse receives $100 of this Ca-source
income and it must be included on the Ca return.
2] The taxpayer’s remaining $100 is taxable in Ca.
Spouse: MT resident
a) The $200 interest becomes MT-source income since the taxpayer is an MT resident.
1] Since MT is a separate property state, the CA-resident taxpayer receives $0 of this MT-source
income.
2] The MT-resident spouse’s $200 is not taxable in Ca as it is MT-source income
Total Ca taxable interest in Column E: $200 as shown in the CA(540NR) figure below.
California Nonresident Form CA (540NR) – Adjustments
| Part I Residency Information | |||||||||||||
| During 2019 | |||||||||||||
| 1 My California Residency (check one) | |||||||||||||
| a myself | Nonresident | Part-Year Resident | X | Resident | |||||||||
| b Spouse | X | Nonresident | Part-Year Resident | Resident | |||||||||
| Yourself | Spouse/RDP | ||||||||||||
| 2a I was domiciled in (enter two letter code) | CA | MT | |||||||||||
| 5 I was a CA resident the entire year (enter state of residence) | CA | MT | |||||||||||
| 6 The number of days I spent in CA for any purpose was: | 365 | 0 | |||||||||||
| 7 I owned a home/property in CA (Enter Y for yes, N for no) | N | N | |||||||||||
| PART II Income Adjustment Schedule | A | B | C | D | E | ||||||||
| Section A - Income | Federal Amounts (Taxable amount from your Fed Tax Rtn) |
Subtractions (difference between Ca & Fed law) |
Additions (difference between Ca & Fed law) |
Total amounts using Ca law as if you were a Ca resident (Subtract col B from col A; add col C to the result) | CA amounts (Income earned or rcvd as a Ca resident and income earned or rcvd from Ca sources as a nonresident) |
||||||||
| 1 Wages, salaries, tips, etc | |||||||||||||
| 2 Interest income | 400 | 400 | 200 | ||||||||||
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