What am I missing? W2 question

[whoisjohngalt]

Here is the situation (Hopefully, I'll explain it well)

my husband worked in state A for 11 months and state B for 1 month in 2013

His company originally screwed up W2 and showed all income earned and all taxes taken in state A only

I know for a fact that there is about 3% rate difference between state A and state B, but I didn't care bc I am lazy and didn't want to fill out two states.

His company doesn't really care that I am lazy and did W2-C anyway, but turns out they are lazy too bc they did an allocation instead of actually calculating income earned in State A and State B

I am using Turbotax for our return.  I did it when we got the original W2 and just re-did it using the corrected one.  Our total refund from states has not changed.

I was expecting it to get a higher refund bc State B has lower tax rate

What am I missing?  I can give fake numbers if needed, but logically, it doesn't make sense to me.

Anyone can help and explain??

[mwcpa]

You need to look at "tax" and "withholding".... "refund" is not what determines proper tax, much angst to the peddlers of tax refund services and not actual tax advise...

State "non-resident" taxes are computed, in general, as follows:

Take total taxable income, as defined by the state. Allocate "total income" to "total income in that state," and come up with a percentage. Apply that percentage to the state tax on total income.... there is your state level tax....

With some fake numbers....

Earn 100,000 in year or which 10,000 is earned in a state ("B)" you do not and did not live. Assume your home state ("A") has a tax rate of 7% and State B has a rate of 4%.  There is no allowance for any deductions in either (to make the math simple).

State B would have a tax under my assumption of:

100,000 * 4% = 4,000.

Allocate 10,000 / 100,000 = 10%

Tax is 4,000 * 10% = 400

State A would have a tax under my assumption of:

100,000 * 5% = 5,000.
Credit possible based on tax paid to B 400

Net tax to A 4,600.

A refund, if one, would be based on the difference between the tax computed and the respective withholding paid to A and B.

[whoisjohngalt]

MW, I actually called MD dept of revenue yesterday (state A)

I wasn't concentrating on the refund part, what was strange to me that it seems state A was taking the entire Federal Income, regardless in which state it was earned.

I am *hoping* it was just Turbo Tax issue, so I forced-fixed it. 

I really should recalculate everything myself, but I've always HATED state taxes, whether I did them for work or for myself