Question

California non resident tax question

Forum|Forum|5 years ago
February 22, 2021
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My son is my dependent and was a student in California in 2020 and earned money while he was there. Due to Covid, he was only in California for 60 days and is a non resident. He is filing taxes in Maryland, our home state and he got a distribution from a 529 plan. For the California tax forms, it is saying that they are going to tax his unearned income from the 529 at his parents' rate and wants information from a California tax return for the parents. We have not earned money in California and are not residents and so will not file in California. In addition, my son is already paying taxes on that unearned income in Maryland. How do we solve this problem of needing parent information for California? Will my son be taxed twice on his 529 earnings?

M

MAK70

As a California nonresident, your son's 529 earning should not be subject to tax because it is not state source income. (Were the funds used for qualified educational expenses? If this is the case he may not owe tax on it). Go back to the California tax section, and make sure you allocated it as non-California income. He should not be taxed on it in the nonresident state.