Question

How to remove NQDC W2 earned in TX from CA return

Forum|Forum|5 years ago
March 16, 2021
1 reply
0 views

My past employer had a NQDC program I contributed to while working in TX. I was separated, moved to CA, and am receiving the funds over six years.

I received a W2 form for the 2019 payout, which shows CA as the state, since I currently live there. Since the funds were earned while working in TX and I am taking payouts over 6 years, I understand I would pay state tax to TX (zero) vs. having to declare on my CA return.

The amount is currently appearing on my CA return as W2 income, so I'm wondering how to remove this from CA return to avoid CA state tax. (On the income section, I can create a "subtraction" line with the total payout amount and comment this is NQDC earned in TX to delete it, but not sure if this is correct...)

Thanks for your recommendations!

D

DianeW777

Any distribution is normally taxable only to the state where you reside. However, when it is paid out and if it is paid by your employer where you resided when you actually earned the money, it's possible it could be the state where you lived when you earned it.

This will definitely be a state by state decision. You can contact the California Franchise Tax Board for confirmation.

If this was paid to a plan and the plan actually sends you the NQDC, then it's more than likely it will be taxed to your resident state upon receipt of payment.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"