State tax filing for married couple in CA and PA

Forum|Forum|2 years ago
January 17, 2024
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Hello,

I've been digging into this issue and still have a couple of questions.

Any guidance will be appreciated!

My spouse and I married in very early 2023 and we have 0 dependents.

I was a CA resident for all of 2023.

My spouse moved to PA mid 2023 and was a PA resident onwards. Her only income for 2023 was ordinary interest income which occurred while she is in PA.

My understanding is:

A) My spouse is a "Part-year resident" of PA and since her ordinary interest income was received while she was a PA resident and was over $33 she will need to file a PA-40 income tax form.

B) My spouse will file "Married, Filing Separately" on the PA-40.

C) Is my CA income excluded from her PA-40 or does community property apply and my income will have to be listed and adjusted later by PA "resident credit" (PA SCHEDULE G-L) to avoid double taxation?

D) We file Form 540NR as "Married, Filing Jointly" for CA.

Am I understanding our tax situation correctly?

Thank you very much in advance!

TurboTax Home & Biz Windows

Best answer by TomD8

A few notes:

CA requires that Form 540NR be used if either spouse is a part-year resident or non-resident of CA for the tax year. See Which Form to Use in this CA tax reference:

https://www.ftb.ca.gov/forms/2023/2023-540nr-booklet.html

CA requires that you use the same filing status on your CA return that you used on your federal return, unless either spouse was active duty military or a full-year non-resident of CA with no CA-source income.

The income earned by the CA-resident spouse after the date of marriage is community property income. That income is considered to be CA-sourced. When filing separate returns, community income is split 50/50 between the two spouses. See Filing Status in this CA tax reference:

https://www.ftb.ca.gov/forms/2023/2023-540nr-booklet.html

The community income received by the wife after her move to PA is taxable both by CA (because it is CA-sourced) and by PA (because it was received as a PA resident).

Pages 11-12 of this CA tax reference have more details about CA's community property rules:

https://www.ftb.ca.gov/forms/2023/2023-1031-publication.pdf

Vanessa A

A) My spouse is a "Part-year resident" of PA and since her ordinary interest income was received while she was a PA resident and was over $33 she will need to file a PA-40 income tax form.

Yes, you are correct.

B) My spouse will file "Married, Filing Separately" on the PA-40.

Yes, you are correct.

C) Is my CA income excluded from her PA-40 or does community property apply and my income will have to be listed and adjusted later by PA "resident credit" (PA SCHEDULE G-L) to avoid double taxation? PA is not a community property state so your income does not need to be listed on your return.

D) We file Form 540NR as "Married, Filing Jointly" for CA

If you are a full year resident of CA, then you would not file a 540NR. Instead you would file a CA 540 as a full year resident. You could choose to file separate returns for CA as well. It may be that she does not have to file a CA return at all since she had no CA source income. It would depend on your community property income. If your income is only from your own employment, then you would report your income on your return and she would not report anything to CA.

California does allow you to file separately for state even if you file jointly for Federal.

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TomD8Answer

Employee

A few notes:

CA requires that Form 540NR be used if either spouse is a part-year resident or non-resident of CA for the tax year. See Which Form to Use in this CA tax reference:

https://www.ftb.ca.gov/forms/2023/2023-540nr-booklet.html

The community income received by the wife after her move to PA is taxable both by CA (because it is CA-sourced) and by PA (because it was received as a PA resident).

Pages 11-12 of this CA tax reference have more details about CA's community property rules:

https://www.ftb.ca.gov/forms/2023/2023-1031-publication.pdf

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