Question

Ensign Johnson is domiciled in Georgia. His wife is domiciled in New York and moved to California to solely to be with him. She works at the Navy Exchange, and has California taxes withheld from her paycheck. She will elect to use the same domicile as Ensign Johnson. Does she have to file a California income tax return?

Yes. She is a resident of California.

No. Since she and her husband are nonresidents of California, under MSRRA, her pay is not considered California income. However, she may file if she wants a refund of her withholding. ●

Yes. Although she is a nonresident of California, she had California income.

Yes. Since she is a nonresident of California, under the MSRRA, her pay is not considered California income and won't be subject to tax, but she must file anyway.

Answer 1

Points of the case :-

1) Ensign Johnson is domiciled in Georgia

2) His wife is domiciled in New York

3) Both move to California

4) California deducts employee tax from paycheck

5) Both of them will choose the same domicile .

Questions of the case :-

1) In which country the return will be filed ?

2) Is deduction of employee tax from California correct ?

Provisions of the law :-

1) Yes , they will have to file a Non - resident return in California as the income earned by her is in the state of California itself.

2) As she is a resident of New York she will file a resident return in New York also , however she will receive a credit from New York of the tax paid in California.