I live in CO. In a 2015 return, I sold an income property in WA state, and turbotax triggered a CO source cap gain subtraction. This was incorrect. Why did it do this?

Forum|Forum|6 years ago
September 19, 2019
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Hal_Al

Employee

The general rule for state taxes: you report all your income (including capital gains and losses) on your resident state return, regardless of where the income (or loss) was earned/sourced.

If you are also required to file a state return, in the state where the property is located, your home state will give you a credit, or partial credit for any tax paid to the non-resident state. The fact that Washington does not have an income tax, does not relive you from reporting the sale on your Colorado return.