CA taxes withheld on wages that were not CA

You can not use software to do this. You have to prepare a CA 540NR Long Form by hand. Doing it by hand allows you to force a zero on the Wage line Column E on the CA(540NR) Schedule. Column E is the column that says what his CA income was. Column E will total to zero. That is going to trigger zeroes on all the other relevant lines on that schedule. Part IV Line 5 on that schedule will wind up as a zero. It is that line that gets posted to the 540NR Line 35 (CA Taxable Income). That will make lines 37, 40 and 42 zeroes. Line 42 is his CA tax. Line 81 will have the tax withheld. The rest becomes obvious. He has to complete the top of the Schedule CA (540NR) as that is where he tells CA he was not a resident. He should send the CA return with a copy of his federal and OR return with a cover letter explaining what happened to the CA FTB.

This is a "textbook" case for using CA form3525. It may not be correctable using TurboTax, nor accepted by the FTB, but seems more likely to work (and MUCH more likely to avoid penalties if it doesn't work) than Alan's approach.

-- Arthur L. Rubin, AFSP, CRTP, Brea, CA

The 3525 is nothing more than a substitute W-2. It is the CA equivalent to the federal 4582. It is not a claim for refund.

California will almost certainly accept the W-2 as indicating CA-source income without the 3525, so backing out the income would probably be considered either an arithmetic error or fraud.

-- Arthur Rubin, Brea, CA