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Let's say I am resident of CA. I have CA income which I pay CA tax. But I also have:
-- some employment income from state of NY and sold a NY property for a profit
-- some employment income from a foreign country and property capital gain from a foreign country
Do I have to pay CA tax on the income from NY and from the foreign country?
I was in a situation for years in which I lived on one side of the KS/MO state line and had income from the other. I am not a tax accountant but the short answer is that there's some sort of offset but both states are involved. I used TurboTax and I paid taxes on my employment income in the employment state and then there was an offset against my residence state taxes. I suggest you use tax software or get a good tax accountant. You should get W-2s that show the income attributable to each state but the offset calculation can be complicated.
What really steamed me was when I moved from NJ to KS in mid-2003, got a bonus in 2004 and owed NJ income taxes on part of it. I asked HR why and they said that since the bonus was based on my performance in 2003 and I lived in NJ part of 2003 (it was all with the same company), NJ got a chunk of it.
Do states tax personal income from another state or foreign country?
Some will. Some won't. Didn't you ask this basic Q just last week?
And/But... I believe that ALL states will have access to the Federal Return (and Schedules)
that you file reporting all your income and sources and sort out the exempt etc.
If any or some of that DOES impact on them... they'll be looking to see what you file to them.
The specific answers you want need to come from a licensed Tax professional of some sort.
And yes the CPA's etc will charge you for advice and to mock up some tax forms for you.
The Comptroller's office at each state should have most of the detail in their FAQ's
and they'll also have 800#'s and email addresses to ask specific or more vague questions.
See which forms are referred to. Maybe try it all on your own using TurboTax and see.
Let's say I am resident of CA. I have CA income which I pay CA tax. But I also have:
-- some employment income from state of NY and sold a NY property for a profit
-- some employment income from a foreign country and property capital gain from a foreign country
Do I have to pay CA tax on the income from NY and from the foreign country?
You might read this: New York State, City of New York, and City of Yonkers Certificate of Nonresidence and Allocation of Withholding Tax
I think the short answer is you pay tax to the state your earned the wages in or sold tangible property located in the state.
But a number of states have agreements with other states not to tax the wages of residences of another state. My guess is CA and NY do not have an agreement since they are not physically next to each other.
The real estate would be tax in NY
As suggested above I would try a tax program such as Turbo tax. You might be able to go to the IRS site and find a free Federal Vendor and maybe that vendor will let you do the state for free if you do not file. I would use last years software and see what answer you get.
I am assuming you were a full time CA resident for the year. If not then you file a part year resident form and probably can split all income.
Your question stems from how States have the right to tax the income of their citizens and legal non-citizen residents, and the right to tax the income earned by workers within the State. Together this means that some income could get taxed double. However, if all income is earned in the United States, I don't believe that there are any examples of where that is the case, though, as States, in taxing their citizens and non-citizen residents (the first right to tax outline above), offer credits for tax paid to other States by way of the other States' right to tax income earned by workers within those other States.
Taxation of income earned abroad is a stickier issue, and there, as others mentioned, you really need the help of a tax professional.
As a general rule, if you are a resident of a state with an income tax, that state will tax you on your worldwide income. In most instances, the state will give you a credit for taxes paid to other states or foreign countries (also some localities as well).
In the example you provided, yes you will have to pay CA income tax on those sources of income (net of the allowable credits for taxes paid to NY and the foreign country).
Regarding foreign sourced income, you report it on your IRS 1040. Make sure you do - failure to report it there can have some really nasty repercussions. Then, the CA-540 makes adjustments to your IRS-1040-based AGI; Turbotax handles it quite well. Ditto for your NY non-resident income tax return.
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