Solved
Taxability of CA income (interest, dividends, capital gains) allocated to resident spouse in a non-community property State.
TP and spouse wish to file MFS for both federal and CA in 2018. TP moved out of CA in January 2018 and is residing in a non-community property State. Spouse is a CA resident the entire year in 2018. Spouse has CA interest income, dividends and capital gains.
Half of all spouse’s CA income will be allocated to TP.
However, TP will not pick up any of the CA income allocated to him as his residency is not CA (CA sourcing rules in interest, dividends, capital gains is based on recipient’s residency). Is this correct?
Therefore, in his f540NR, TP will not pick up any half of the income from spouse.
Thank you for your help.
