Jainen Need Calif Assist

[S T]

T/P resident of Calif. Was laid off, obtained a job in Texas and was employed from 7/06 - 10/06 then was laid off and returned to Calif.

Question, Texas has no state tax. T/P did not abandon Calif residency, so is Calif going to tax all of the Texas earnings?

Then, what about moving expenses to Texas and back to Calif?

Thanks

Sandy

[fliszt]

I had a similar

situation here. Client lived in Wisconsin but worked in Minnesota. The Minnesota employer withheld MN state tax. So on the w-2 box 15 listed the state and box 17 listed the state tax withheld. So that's how I entered his info.
Hope this helps you.

[jainen]

it turned out

>>is Calif going to tax all of the Texas earnings?<<

Since he is a California resident, CA taxes his world-wide income.

>>what about moving expenses to Texas and back to Calif?<<

Although it turned out to be a short period of time, his job in Texas was not expected to be temporary (at least, you haven't described it that way) so he can't deduct travel costs. He didn't meet the employment requirements for moving to Texas, but if he found work his move back to California might qualify for moving expenses.

Sandy, I'll bet you already knew all these answers. You were just hoping there is something else, because this kind of stuff makes for an awkward interview.

[S T]

Thanks

Thanks Jainen,

Your right this one is awkward, how to tell a t/p that has had lack of employment during 2006 and incurred expenses in trying to find employment, even in another State and then move back to Calif at additional costs, that not all of his expenses can be deducted.

Altho maybe the move back to Calif, No Calif to Texas back to So Calif. Just omit the move expenses from No Calif to Texas.

Sandy

[jainen]

deductible on Schedule A

>>incurred expenses in trying to find employment<<

That's a different question that you didn't raise in the original post. It doesn't seem likely, but if the Texas travel was in the nature of a job search then reasonable expenses might be deductible on Schedule A.

[S T]

Unfortunately

Thought about that also, but not enough deductions to exceed Standard Deduction.

Sandy

[jainen]

lower tax bracket

>>Thought about that also<<

I don't suppose your client would be satisfied if you pointed out that since he was traveling instead of working, his taxable income is so much less and he is in a lower tax bracket?

[S T]

Of course not

Of course not, t/p is thinking that all withholding should be refunded, since he made so little, but of course Fed taxes the UI and then he has a small early distribution that I don't have an exception to the 10% penalty. So end up at 15% bracket rather than 10%, but he did receive his telephone tax credit.

Sandy