Background – I am an international student on an F1 visa from India (non-resident alien for federal tax purposes) living in California. I am using Springtax to file my 2025 taxes.
So, as the title says. I have received 1099-INT forms for interest income (from betterment) for the cash account (or simply HYSA). On the review page for Sprintax, I can see that the interest income is excluded from federal tax (NRA status – IRS Article Link).
My confusion is with the CA State Tax return. Will the interest income be included or not?
Since I am a non-resident of California, my understanding is that I should be taxed only on California-source income (including this interest income). But, currently, Springtax is excluding it. So, I am looking for some confirmation on whether this is correct.
Would appreciate clarification from anyone who has dealt with this before. Thanks.
1099-INT form for Non-Resident CA Return
byu/Plater311 intax
Posted by Plater311
1 Comment
> I can see that the interest income is excluded from federal tax
Only certain types of interest are excludable. In particular, the interest from Betterment may be taxable because Betterment is not a bank or any of the payers listed in the IRS article. If so, you need to report such interest on Schedule NEC (Form 1040-NR). The US-India tax treaty may provide for a 15% tax rate on taxable interest.
> Since I am a non-resident of California, my understanding is that I should be taxed only on California-source income (including this interest income
Interest income is not sourced to California if you are a nonresident of California. See FTB Pub 1031.
https://www.ftb.ca.gov/forms/2024/2024-1031-publication.pdf
However, California also does not conform to any federal tax provisions related to nonresident aliens. This means that you should report all of your interest in “total amounts” in Schedule CA (540NR), part II, column D. You must do this even when the interest is not sourced to California and not reported in Column E.