I inherited a client where the husband is retired and only received SS and nontaxable 1099-R. He lives in HI.  The wife remains in CA and has W-2 income (plus small amount of Interest).  Last year they considered him a resident of HI and her a resident of CA , They filed a resident HI return and CA 540 NR for some reason.

What I think I need to is file a resident return for *both* HI and CA.  And for HI I would do a Schedule CR to get a tax credit for the Tax Due amount in CA on her income.  This will still show him owing some HI tax.  I am assuming I DON'T do a CA Sch C for the amount of Tax Due in HI?

Is this the correct way?  Given CA is community property state, I wasn't sure if that plays into the picture as well.

thank you