interstate income taxes - Posted by James Buster

Real Estate Investing Real Estate Law
1

Posted by Diane (TX) on March 31, 2003 at 07:16:16:

CA makes it own rules, and they’re generally in CA’s favor :slight_smile:

2

interstate income taxes - Posted by James Buster

Posted by James Buster on March 29, 2003 at 04:43:40:

I’m trying to firm up my understanding of interstate income taxes. Here’s how I understand it to work. Please correct me if I’m wrong:

I’m a resident of state A. I have a rental property in state Z.

  1. Because I’m not a resident of Z, only income actually earned in Z (the aforesaid rents) is taxable in Z.
  2. As an individual filing a Z tax return, I receive Z’s personal exemption, applied only vs Z income.
  3. All my income is taxable in A, if it has a personal income tax.
  4. Excess Z depreciation results in a suspended passive loss for Z income tax, even if I have no suspended Federal loss.
3

Re: interstate income taxes - Posted by Diane (TX)

Posted by Diane (TX) on March 29, 2003 at 12:24:12:

  1. Because I’m not a resident of Z, only income actually earned in Z (the aforesaid rents) is taxable in Z.

Generally correct, but the mechanics may vary.

  1. As an individual filing a Z tax return, I receive Z’s personal exemption, applied only vs Z income.

Often, you will get a pro-rated exemption. If Z income is 2% of your total federal income, you might get 2% of Z’s exemption amount. Or you could get no exemption.

  1. All my income is taxable in A, if it has a personal income tax.

Depends on the state. Often Z state rental income is taxable only by Z, but it may be taxable in A and you take a state tax credit for double taxed income.

  1. Excess Z depreciation results in a suspended passive loss for Z income tax, even if I have no suspended Federal loss.

This also would depend on the state.

4

CA is claiming tax on out of state income (NT) - Posted by David Krulac

Posted by David Krulac on March 30, 2003 at 08:06:09:

`

5

Re: CA is claiming tax on out of state income (NT) - Posted by James Buster

Posted by James Buster on April 01, 2003 at 16:41:03:

I find it odd that CA cannot apply sales tax to CA residents buying out-of-state goods, but can apply income tax to income earned out-of-state, even given the absurd Supreme Court interpretations of recent decades. Now I have to figure out CA’s arcane rules for partial year residents.