Stock sales or dividends when not a CA resident

Forum|Forum|1 year ago
May 11, 2024
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I was a California resident until December 2014. I moved abroad since then. I keep filing my Federal taxes using TurboTax and it says I don't need to file state taxes. So far it worked, but I just received a letter from CA FTB that assessed a CA state tax for 2021 as I sold a relatively high amount of stock that was reported by Charles Schwab to both IRS and CA FTB. I dowloaded TurboTax CA State Tax 2021 and tried to go through the filing steps. By default, even though I chose "full year CA non-resident" status it calculates a State Tax due unless I say none of that revenue is from CA source. I am confused. How do I know the stock sale or dividend income is from CA source or not? Most of these companies, if not all, are headquartered outside California. For example, Amazon and Tesla--stocks of which I sold--aren't CA companies.

How do I handle this situation? CA FTB leaves me until 6/18 to respond or pay.

Not A Product Question

Best answer by TomD8

From CA FTB Publication 1031, under Section I, "Income taxable by California", on pages 6-9:

"The gain or loss from the sale of stocks or bonds has a source where you are a resident at the time of the sale."

"Interest and dividends generally have a source where you are a resident. Exception: Interest and dividends have a source in California if the account or security is used in a trade or business or pledged as security for a loan, the proceeds of which are used in a trade or business in California."

https://www.ftb.ca.gov/forms/2023/2023-1031-publication.pdf

So, unless your interest and/or dividend income falls under the exception, none of your capital gain or dividend income is California-sourced or taxable by California.

TomD8Answer

Employee

From CA FTB Publication 1031, under Section I, "Income taxable by California", on pages 6-9:

"The gain or loss from the sale of stocks or bonds has a source where you are a resident at the time of the sale."

https://www.ftb.ca.gov/forms/2023/2023-1031-publication.pdf

So, unless your interest and/or dividend income falls under the exception, none of your capital gain or dividend income is California-sourced or taxable by California.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.