I have a client who has approx $20,000 in taxable moving expenses paid for by his employer. He took a job in California in late 2018 and most of his moving expenses were paid in early 2019. Turns out he got canned in the summer of 2019 (6 months in to the job!) and moved from CA back to Illinois.
I know that you cannot deduct moving expenses on the Federal return, but California is one of a few states that still allow the moving expense deduction.
My question is....since my client moved OUT OF California in 2019, can he still deduct those moving expenses on the CA 540 individual tax return. Or does CA only allow that moving deduction if you are moving into CA?
Good luck to all - the floodgates open in about 2 weeks!
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Looks like you also get a partial deduction (based on the ratio of CA wages to all wages) even if you move out. www.ftb.ca.gov/forms/2018/18-540nrca-instructions.html
Page 56:
Line 26 – Moving Expenses
California law and federal law are the same for moving expenses. If you moved:
If you moved out of California in connection with your new job and received compensation from that job attributable to a California source, your moving expense adjustment will be limited by the ratio of California source compensation from the new job to total compensation from the new job.
Looks like you also get a partial deduction (based on the ratio of CA wages to all wages) even if you move out. www.ftb.ca.gov/forms/2018/18-540nrca-instructions.html
Page 56:
Line 26 – Moving Expenses
California law and federal law are the same for moving expenses. If you moved:
If you moved out of California in connection with your new job and received compensation from that job attributable to a California source, your moving expense adjustment will be limited by the ratio of California source compensation from the new job to total compensation from the new job.
@Ephesians3-14 wrote:
I have a client who has approx $20,000 in taxable moving expenses paid for by his employer. He took a job in California in late 2018 and most of his moving expenses were paid in early 2019. Turns out he got canned in the summer of 2019 (6 months in to the job!) and moved from CA back to Illinois.
It's not clear to me what move was being reimbursed. Was the $20K for the 2018 move from IL to CA but not reimbursed until a 2019 pay cycle? Or was the $20K some kind of severance for the 2019 layoff move back to IL?
Couple things...
Illinois employer did not pay for his move back to IL, the CA employer paid the moving expenses.
All of the taxable moving expenses were included in his W-2. These were primarily expenses for transporting goods.
@Ephesians3-14 Then see #2 and #3.
So let's say I love from California to wa under same employer and I was granted RSU in CA, some of which vested in WA which were attributed to California income. Now do I get to partially deduct my moving expenses?
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