Hello,

I have an individual income tax return question regarding the Other State Credit (OSC). Should the OSC be claimed on the nonresident state return or on the resident state return?

For my tax case, the taxpayer is a Virginia resident for 2025. He received a Form W-2 with Virginia state tax withholding. In addition, he operated a single-member LLC business (it has net business income in 2025) in California. Therefore, I am filing the taxpayer as a Virginia resident and a California nonresident.

On the Virginia Form 760CG, the net tax is $3,800 and total payments are $4,000, resulting in a $200 refund from the Virginia resident return.

On the California Form 540NR, I noticed that the California tax is $600, and the return shows an Other State Credit (Virginia) of $600.

My question is whether this result sounds correct. Specifically, I am not sure why the California Form 540NR is claiming the Other State Credit instead of the Virginia resident return claiming a credit for taxes paid to California. Does this treatment sound correct for the facts described above?

Thank you very much for your assistance.