RSU granted in CA, but vested after moving to NY

Forum|Forum|2 years ago
September 23, 2023
1 reply
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I moved from CA to NY in 2019 and continued to work for the same company. My company did not withheld CA taxes the following years ( 2020 onwards ) when the RSUs vested, they only withheld NYS and NYC taxes. I recently only found out I have the pay taxes based on the grant date location as well, meaning I had to file CA tax return. I did not file CA tax return for the years 2020, 2021 and 2022.

I need advice on what I should do now. Do I need to file the CA returns and amend NY returns for the years 2020, 2021 and 2022? If yes, will the taxes I pay to CA get credited in the amended NY return when using turbotax?

TurboTax Premier Online

T

TomD8

Employee

With RSU's, CA taxes non-residents on the wage income to the extent that services were performed in California from the grant date to the vesting date. See Section G of this California tax publication:

https://www.ftb.ca.gov/forms/misc/1004.html

In other words, as a CA non-resident, income from RSU's with a grant date after you ceased working in California would not be subject to CA income tax.

Your new resident state would normally grant you an "other state credit" if you have income that is taxed by both CA and the new resident state. (Note: if the new state is AZ, OR, or VA, the credit would be "reversed" - it would be granted by CA, not by the new resident state.)

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

H

hariAuthor

Employee

Thanks for the reply.

So in my case, would I have to file CA tax returns for 2020, 2021 and 2022? And amend my NY returns to receive the credit?

O

Opus 17

Employee

@hari wrote:

Thanks for the reply.

So in my case, would I have to file CA tax returns for 2020, 2021 and 2022? And amend my NY returns to receive the credit?

Probably not. The income is only taxable in the year the RSU was vested. You don't say when that was.

Let's guess the RSU vested in 2022 and you are working on a late tax return. The income is only reported on your 2022 return since that's when it vested.

You need to start by counting the days from the date the RSU was awarded to the date it was vested. Let's assume it was awarded on July 1, 2019 and vested June 30, 2022 (exactly 3 years, or 1095 days). Let's also assume you moved to New York on September 1, 2019. That means that, for the period between the award and the vesting, you lived 62 days in California and 1033 days in New York. 62/1095=5.66%, so 5.66% of the taxable value of the RSU is California taxable income. You file a 2022 California Non-Resident return and report 5.66% of the income as California income. You include all the income on your New York return. New York will give you a tax credit for the amount of tax you pay on your California non-resident return which will reduce your NY tax.

You only report income when the RSU actually vests, so the only reason you would file amended returns for the years in between is if part of the RSU vested in each tax year.