Question

California state tax on capital gains

Forum|Forum|6 years ago
February 15, 2020
1 reply
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Hello,

My spouse was in California for school for the whole of 2019. I was working in Washington state (no state tax) for the whole of 2019. My employer has made HSA contributions to my account and I also have capital gains from my stocks. Neither of these two count as california income.

We usually file a married filing jointly return for maximum tax benefit and that is what turbo tax choose this time too. But it looks like I am being made to pay taxes in CA for my WA employer's HSA contributions and my capital gains just because my wife was a resident of CA in 2019. Is that really how it should work? I tried changing to married filing separately but that blew a hole in my federal return.

Any advice?

Not A Product Question

M

MAK70

If you indicated that you were a California nonresident and file a joint California return, California will include all the income (including the add back of the HSA) to determine the California tax RATE which is then applied only to the resident state income. If you look closely at the return, you will see this on the SCH CA54NR Part IV shows the CA AGI and the deduction percentage.