Help with relocation issues: incorrect W2, overtaxation wages and RSUs

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    I was about to sit my son down to explain how to use turbotax so that he can do this himself in the future (so no bashing please; he is pretty newly employed). In 2018 he worked in CA a little over half the year, and transferred to our (non-income tax) state. However, he failed to update his address in the system, nor did he look at any payslips online (yeah, I know). It turns out that his company withheld taxes for all his salary and RSUs as though they were CA origin, and reported all of his income as CA origin on his W2. He has approached payroll asking that this be rectified- we assumed that they would need to issue a corrected W2 and correct info sent to CA. They said they cannot do anything retroactively, and that he should deal with this by indicating the necessary information on the CA part-year resident form.

    Please note that his total income will not simply be apportioned based on how much time was spent in each state as the income stream was not a constant rate (due to when RSUs vested). And some income (relocation money) should not be attributed to CA at all.

    My questions:
    1. Is this reasonable, or should the company be correcting the W2?
    2. Is he going to have trouble from CA if his company is reporting all his income as CA origin, but he is claiming part-year residency? Does he need to prove this in some way? The company does know where he has been working, but he has not gotten a new driver’s license yet.
    3. Should he report (on Turbotax) the W2 info as it exists when he fills out info for the federal return, or is that going to cause problems when he gets to the state return? ie should he report the true CA wages for box 16 in the federal turbotax W2 section or what is listed on his actual W2?
    4. My son will be getting a new driver’s license asap. Will it cause problems for the whole part-year residency issue if he uploads his current CA license for the turbotax id confirmation part in order to file the returns?
    Any other thoughts?
    Thanks in advance.

    • This topic was modified 2 years, 10 months ago by notmyjob.
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