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How does TurboTax handle living in 2 different states and the sale of a house and the separation OF INCOME EARNED BETWEEN THE States

Forum|Forum|4 years ago
December 2, 2021
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We sold the house in Calif at the end of January and immediately moved to Texas. I received pension or one month in Calif then 11 months in Texas. Can TurboTax handle this

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Best answer by pk12_2

@Gbgirvin of course TurboTax can handle this situation.

Assuming that you (a) sold your residence in Jan 2021 and moved to Texas by the end of January 2021; (b) changed your residency ( voter reg, driver's license etc. etc. ) on Feb 1st to Texas on Feb 1st 2021; (c) you continued to receive your pension / Social Security in Texas from Feb 1st through the end of the year; (d) you have no other income from California since 1st Feb 2021.

In such a case you will have to file the usual federal return and for the State return you will need to file two returns as follows--> (1) Non-Resident return for CA allocating only the pension for the first month while a resident of CA & the sale of property in CA. If there were nay taxes held in CA , the return will reconcile this for you; (2) File a Resident return for your resident state ( Texas having NIL personal income tax )

Does this help ?

M

Mike9241

yes. but the state allocations are not automatic.

the sale of the house, the January pension and any other income earned while a CA resident or earned by a nonresident where the income has nexus to Ca. will be taxed there. Texas at this point does not tax individuals.

for example, rental property located in CA has nexus to Ca and would be taxed there even if you are a Tx resident.

P

pk12_2Answer

Employee

@Gbgirvin of course TurboTax can handle this situation.

Assuming that you (a) sold your residence in Jan 2021 and moved to Texas by the end of January 2021; (b) changed your residency ( voter reg, driver's license etc. etc. ) on Feb 1st to Texas on Feb 1st 2021; (c) you continued to receive your pension / Social Security in Texas from Feb 1st through the end of the year; (d) you have no other income from California since 1st Feb 2021.

In such a case you will have to file the usual federal return and for the State return you will need to file two returns as follows--> (1) Non-Resident return for CA allocating only the pension for the first month while a resident of CA & the sale of property in CA. If there were nay taxes held in CA , the return will reconcile this for you; (2) File a Resident return for your resident state ( Texas having NIL personal income tax )

Does this help ?

T

TomD8

Employee

You became a resident of TX for tax purposes on the day you began living in your new permanent home (your domicile in tax terminology) in Texas. The date of your driver's license, voter's registration, etc., are irrelevant. That's because some people wait months after moving to get a new driver's license or to register to vote. Your residency for state taxes is determined by the location of your domicile.

All your income prior to that date is taxable by CA, including any retirement income. If you had a taxable capital gain from the sale of your CA house, it too would be taxable by CA.

For 2021, you'll have to file a part-year resident CA tax return.

There is nothing for you to file in Texas. Texas has no state income tax.

TurboTax can handle this common situation.

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

P

pk12_2

Employee

@Gbgirvin agreeing with @Mike9241 that the allocation of income while not automatic -- the screen asks for you to allocate the federal income ( category by category ) between your Non-Resident State ( CA in your case ) and Resident State ( TX in your case, even though there is no PIT in TX ); and disagreeing with @TomD8 as to the start of Residency in the new state --- it is the date when you decide that you are a resident, an intent -- you prove your intent by taking steps to show closer connection ( Nexus ) -- such a DL, Voter's Reg, purchase of a home, bank account, kids in school etc etc. ) In case of CA I am aware of the form actually asking "date when you became a resident " and "when you became Non-Resident" for each member shown on the return, but it does not ask for proof. It has always been an "intent" question.

Hope this clarifies the situation.