California Spouse Resident and NR

[Persona Tax]

In ProConnect, how do we file both a CA 540 and a CA 540NR? 

the FTB allows spouses who file MFJ federally to file separate 540s per their residency.

"If you file a joint tax return for federal, you may file separately for California if either spouse was a nonresident for the entire year and had no income from California sources during 2022."

Tax Payer was a full resident during the tax year, however spouse lived in home country for the year (EZ). No income was derived from CA sources (contract income from a NY source).  

All of this is inputed on the ProConnect state Nonresident screen. However, the software is not generating both of the 540s. 

thank you in advance,

S~

[sjrcpa]

It won't. Does ProConnect allow you to split a MFJ return into 2 MFS files? If yes, do that. Use the MFJ file for the federal return. Mess around with the 2 MFS files for CA returns until they are correct and file CA from these 2 files.

A bit clunky but it works.

[Persona Tax]

thanks for responding, though i don't quite understand.  we want to keep tax payers federal as MFJ, which we can do.  are you saying to separate the federal in order to trigger the MFS for California?  If I do this, can I then go back and file federally MFJ?

[BobKamman]

The nonresident spouse has community income from California.  I suppose California won't mind as long as the resident spouse pays tax on all of it, but what do you mean by "EZ"?  That's the country code for the Czech Republic.  Which also recognizes community property.  They might not tax it, if it was earned in New York, but try convincing California to ignore it.  

[sjrcpa]

@DTLATaxes - Yes and Yes.

@BobKamman I'm no expert on community property, but if one spouse never lived in CA, is the CA resident spouse's income still community property? Assuming where the other spouse lives is not Czech Republic or another community property place.

[BobKamman]

If an Oregon resident marries a California resident, a mile away across the state line, does the Californian still own all his/her income?  No, only half, even if the spouse never sets foot in the state.  

[Persona Tax · Accepted solution]

so, i figured it out.  One has to uncheck the "full time resident" AND the "lived with spouse" boxes on the filing screen. This triggers the 540NR. Per California FTB publication 1031, if one spouse is CA resident and the other is either NR or part time resident the couple files a 540NR OR file two CA returns: 540 for CA resident spouse and 540NR for CA non-resident spouse. Though ProConnect seems to be set up only for the former. 

Hope this helps others.  

I wish ProConnect had this as a "Frequently asked question" hyperlink on the appropriate screen.

Happy taxing ya'll

Samir @DTLA Taxes

[Persona Tax]

Establishing CA residency is two-parts subjective and one-part objective LOL.  One might interpret FTB code as the couple's "intention". According to CA FTB tax code it depends on where married couple is domiciled. But also whether or not a spouse spent enough time in the state during the tax year and/or if a spouse earned any income from a California source.   Since OR is not a community property state, if OR spouse earned ONLY from non-CA source and never resided in CA then the couple would file a 540NR, and California Schedule CA NR on which they'd denote spouse A as a full-time CA resident and spouse B as a non-resident, as well as make the necessary income adjustments (Federal vs. California).  

Hope this gets at the question. 

[puravidapto]

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@Persona Tax wrote:

so, i figured it out.  One has to uncheck the "full time resident" AND the "lived with spouse" boxes on the filing screen. This triggers the 540NR. Per California FTB publication 1031, if one spouse is CA resident and the other is either NR or part time resident the couple files a 540NR OR file two CA returns: 540 for CA resident spouse and 540NR for CA non-resident spouse. Though ProConnect seems to be set up only for the former. 

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Proconnect can only file a joint CA return on form 540NR in your case (as long as one spouse is nonresident or part year resident, it is 540NR). 

If you want to file separate CA returns, you need to split the joint return to two separate returns. Disregard the federal returns and only file the CA returns, because they have filed joint federal returns already, and federal returns are only used to file separate CA returns.

When you file separate returns, you need to allocate income property as CA is a community state. The California has clear guideline here: https://www.ftb.ca.gov/forms/2021/2021-1031-publication.pdf . In your particular case since the taxpayer is in CA resident and spouse is nonresident, the taxpayer will report half of his income only to California, and the spouse will report the other half of the husband's income allocated to her. 

Since you have paid for the joint return contains both social security numbers, Intuit should not charge again for the state returns with the same social security numbers, and you can get credits for the two extra charges. This could be automated by charging for new social security numbers, as I proposed in this idea: https://proconnect.intuit.com/community/proconnect-tax-idea-exchange/enhancement-bug-to-charge-only-... . It takes time and effort to provide feed back to Intuit but someone has to do it in order to bring out changes that we wanted. I had successful stories despite being slow and hard. You can help by clicking on the above link, and upvote the idea. Before the idea is implemented, you have to go through the manual, and time consuming request process to recover the cost for the extra two returns.

Please click the link in my signature to upvote the other idea if you can, thank you.