Nonresident Returns - CA & NJ

[ed_accountant]

Hi,

I have a client that has moved from NJ to CA in 2008. For year 2009, the wife has a fulltime CA job and just purchased a house in CA while the husband is still working fulltime in NJ residing in the original home in NJ. In summary, the wife works fulltime in CA home and husband works fulltime in NJ home.

Has anyone dealt with this situation regarding residency? Any suggested strategy?

I am not clear on which state to claim as residency and which state to claim part-tim non-residency..

Thanks

[joanmcq]

PY or NR is the same form for CA, the 540NR. If he did not move to CA, none of his income would be community property or CA source. She is taxed in CA on her CA income. CA starts with fed AGI, & then apportions tax based on CA income to non-CA income. She is a PY resident & he is a non-resident.

For NJ, lets see if an NJ specialist weighs in!

[jainen]

>>Any suggested strategy? <<

Spidell Publishing has a great book on non-residents at www.caltax.com. There are some quirky rules so don't make any assumptions about anything, not even who is a resident of which state. For example, each state only taxes its own income. But (as Joan points out) the tax RATE is determined by total FEDERAL income. To avoid the higher bracket you might need to file separate instead of joint.