CA help needed

[Margaret CPA in OH]

I haven't had a CA return for more than 10 years and now have a part year for new client who relocated to OH in May.  She had one month of wages in CA, got laid off with a severance package, moved to OH May 1 and began new OH job in August.  I'm a bit confused (no. a lot) with how to manage the FTB-3853.  Her 1095-C shows January coverage only.  She chose not to enroll in ACA but began coverage again with her OH job.  I don't quite understand exemptions with a good severance package then moving out of state.  Any assistance would be most welcome!

 

[Margaret CPA in OH]

Bump, please.  I know there are CA folks here.  Help me, please.

[Margaret CPA in OH]

Bump again.  So 52 views and no replies.  I thought at least ONE person on this board was from CA or knew CA tax.  I'm not even sure of other options for research. I wonder if anyone answers the phone there....

[jklcpa]

Those # of views include bots, webcrawlers, etc. so doesn't mean members that can actually post an answer.

I'm very far from CA but took a brief look that the instructions, so don't take my word for this, and maybe a CA preparer will comment whether these entries would work:

• Indicate coverage for Jan, then
• use code "C" for a 3 month short coverage gap for the months of Feb through April, and finally
• use code "E" for the period from May 1 through Dec 31 as a nonresident.

Technically, this person wouldn't qualify for the short coverage gap because it is actually more than 3 months, but at the point of May 1 the person is no longer within the state and definitely qualifies to use another code, but I don't know if it would work or not.

[Margaret CPA in OH]

Thanks, Judy, I've done that and also cannot figure out how to indicate the non-resident status as of May.  Also the calculations are skewed because it begins with federal AGI even though I input by the month the CA income.  The bottom line seems to be an $85 penalty but, in my opinion, it should not be CA business about coverage from May 1 so only a 3 month gap while a resident.  She may just have to swallow the $85 penalty.  It's costing me too much time right now.

Thanks again - you always come through for us!

[Max W]

CA has a NR (Non-residency) screen to indicate the dates lived in CA.  HTH

[Margaret CPA in OH]

Thanks, Max W, I have the CA  Sch 540 NR form and input the date of nonresidency but it doesn't seem to make a difference that she was not a resident for several months of not having insurance.  After working some more her penalty is now $511 which I don't think is fair for 3 months of noncoverage as a resident.  It's a puzzle to me.

[BulldogTom]

1 hour ago, Margaret CPA in OH said:

Thanks, Max W, I have the CA  Sch 540 NR form and input the date of nonresidency but it doesn't seem to make a difference that she was not a resident for several months of not having insurance.  After working some more her penalty is now $511 which I don't think is fair for 3 months of noncoverage as a resident.  It's a puzzle to me.

Margaret,  

The reason you are confused is because CA tax is confusing.   They want you to recalculate the federal return as if you were a resident for the entire year, then make adjustments on the CA 540 CA form for items not taxable by CA.   They prorate the deductions and the taxes based on the percentage of income earned in CA.

As for the 3858, I think you have it right.   She was in the state and did not have health coverage the entire time.   

Sorry so late chiming in, I have been super busy and not been able to look at the board much.

Tom
Longview, TX 

 

[Margaret CPA in OH]

Thanks, Bulldog Tom, I see how the calculations are for the total and then make the adjustments for CA residency.  I see the proration except for the 3853.  When I go though the affordability input, she had only $450 unemployment for February and $900 each for March and April so 3 months or less without coverage as a CA resident.  So it seems a penalty of $511 is a bit steep.  I must be doing something wrong but can't figure it out so am frustrated.  It's possible that the January pay as a severance package (sort of 6 months wages) skews the whole thing, though.  But it was her only income for January then unemployment Feb.-July before her new job in August.  She did continue to receive unemployment after moving to OH in May but became an OH resident and got a driver's license May 16. Then again, CA does not tax unemployment so it shouldn't matter.