Dilemma-W-2s'

[Bird Legs]

Client lives in Texas. Most of the year she is California trying out for parts in movies. She has been in CA for several years coming back to TX for 2 or 3 weeks at a time 3 or 4 times a year.
Dilemma. In 2006 she received a W-2 reporting Wages-Federal & State-Ca. of 8000.
and Fed & CA state W/H.
Client also received a W-2, from same employer, reporting the exact same federal
& state wages, except the state was LA. LA state W/H was deducted from this W-2.
The only difference between these 2 W-2s is that the ones reporting LA. wages
the copy B W-2 is blank, with a notation that "FORM INTENTIONALLY LEFT BLANK"..
Client did go from CA to LA to film a movie.
Does this mean that client earned a total of $16,000.? $8,000 in each of the 2 states?
Or earned a total of $8,000 and it has to be reported on the CA return because that was
the place of employment and also reported on the LA return because that is where the
film was made?
Another question: On the W-2 Box 12 Code L "Substantiated Employee Business Expense" there is an amount $354. Can anything be done with that?
On the CA W-2, box 14, Other, code CA SDI, there is an amount. Can anything be done with this?
On a separate CA W-2 from a different employer Box 14 code CA VPDI, there is an amount. What is this and can anything be done with it?

Hope I did not confuse you too much. All help is greaty appreciated.

[abby]

too much information for one form

I've seen these for my clients, too - there is just too much to report for one form, so they add an additional form to report other state's information.

You are correct in your assumptions - she only made $8000 and she had tax obligations (or at least withholding) in CA and LA

I'm not clear if the Box 12 code is for reimbursed or unreimbursed expenses, but I think it's likely they were reimbursed or the employer wouldn't know about them. If this is the case, then it would be reported as reimbursement of reported expenses if the employee files a form 2106 (or qualifies for the better treatment of the Qualified Performing Artist Deduction - and that is an entirely new thread if she does) Still I'm not absolutely sure of this one.

The SDI is State Disability and a schedule A deduction - the V in VPDI stands for Voluntary, and TB 4-9 under State Taxes says that Mandatory State Disability Payments are deductible, so probably the Voluntary amount wouldn't be. Perhaps one of the California preparers could confirm or clarify.

It's certainly possible she will owe tax in both states. but that is not clear to me based on the information presented. They may be treating her as a CA resident, and it may be that CA is her tax home, but it may be that Texas still is. Her relationship to earning the $$ only in LA or in CA needs further clarification.

Hope that helps

[ED SMITH]

The SDI is an itemized expense the same as state income tax withheld. The VPDI is not.

You will have to prepare a LA non-resident return. The CA return should be prepared using
form S, which allows for credit of the state tax paid to LA.

[Bird Legs]

Abby, Ed

Thank both of you for your response. Did not think about the CA credit for tax paid in LA.
Client went to CA in Jan. 2006 and stayed there for the rest of the year. Came back home to Tx for 2 or 3 weeks at a time. Her husband lives in Tx. and their home is in TX. They are not divorced or separated. She just wanted to go out to Hollywood and see if she could not get parts in movies.
She did a lot of stand up comedy in Tx. before going to CA.
Again thanks to both of you.

[S T]

Maybe

Depending on the facts and circumstances, she could be a non-resident of Calif, so you might need to look into that for filing purposes.



Sandy

[oceanlovin'ea]

Tax home

Look in TTB page 8-10 under Tax Home. It appears to me that even if she did stand up comedy in Texas before she went to CA in January, tax home would be determined by where she did the most work during the year. If she did not do any work while she was home in Texas, then Texas would not be her tax home. CA would because she did most of her work there.

If Texas was her tax home, CA would still want to tax her earnings while in CA. But it would seem to me that if she made the movie in LA and was able to consider Texas her tax home, CA would not be able to tax her wages for that job. CA might just be trying to sneak in some extra tax dollars.

Side thought, she probably has a CA address so CA will say she lives in CA.

Last year at the GAEA convention, one of the lectures was on state taxes, which I thought was of no concern to me since Florida doesn't have state income tax. It was a real eye opener about where wages can be taxed.

Linda F

[Bird Legs]

Sandy, Linda

Appreciate your response.
Thank you very much.
Bird Legs

[joanmcq]

As a CA practitioner, I can pretty much ascertain that, if she earns most of her money in CA and spends most of her time in CA, CA will consider her a resident, regardless of where her husband lives, especially if the other choice is a non-tax state. Does she have an apartment in LA?

[Bird Legs]

CA Return

Yes, client rented an apartment in CA in about April 2006. She still stays there except when she comes back home for a couple of weeks at a time, 3 or four times during the year.

[S T]

Maybe this will help

Bird,

Go to this link, http://www.ftb.ca.gov/forms/06_forms/06_1031.pdf Some good examples, but appears as tho she might be a resident for Calif purposes.

Sandy

[Bird Legs]

Sandy

Thank you very much for your response. I do greatly appreciate it and all the others that have responded.