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Wendy Reed
Wendy Reed, Enrolled Agent
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If I work for a Texas-based company, that has no ...

Customer Question

If I work for a Texas-based company, that has no regional offices outside of Texas - but I personally choose to relocated to California and work remotely..from my residence in California - am I subject to California state income tax?
Submitted: 6 years ago.
Category: Tax
Expert:  Wendy Reed replied 6 years ago.

Hello there,

This is a common concern when a person works for one state and lives in another. Generally, most states that have personal income tax have two different methods of taxing, they tax you as a resident (where any income you earn anywhere is taxable because you are a resident) and they can tax you as a non-resident (when you do not live in that state but earn income in connection with that state).

You will be resonsible for personal income tax to the state of CA when you become a CA resident, even if the income you earn is in connection with another state. If you were earning Texas income and Texas had an income tax that you also had to pay, then you may be eligible for a credit from CA. But, because Texas has no personal income tax, no credit will be allowed.

CA state income tax varies from 1.o to 9.3%. Here is a link to more information about CA state income tax: http://www.ftb.ca.gov/individuals/index.shtml

Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience: 15+ years tax preparation and tax advice.
Wendy Reed and 4 other Tax Specialists are ready to help you
Customer: replied 6 years ago.
Thank you for the insightful reply - Do you know how "residency" is determined? If I maintained a Texas address - is there anyway way I can circumvent the California Income Tax? For example, if I worked in Texas 6 months and California for 6 months,etc.?
Expert:  Wendy Reed replied 6 years ago.

Residency is rather tricky..

Residents are defined as persons In California for other than a temporary or transitory purpose, or those domicoled in CA but outside of CA for a temporary or transitory purpose.

If you lived in CA for 6 months each year, you would not be considered to be there for a temporary or transitory purpose, so at the very least you would be considered a resident for at least 6 months. Other factors would also be taken into consideration, such as where you vote, where you h ave a driver's license, where you own property, etc. It is my feeling that CA would not be likely to agree with your claim that you "are not a resident" for 6 months of the year.

You may use the following guidlelines to understand CA residency and the rules of taxation:

http://www.ftb.ca.gov/forms/07_forms/07_1031.pdf

http://www.ftb.ca.gov/forms/misc/1100.pdf

 

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Wendy Reed
Wendy Reed
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15+ years tax preparation and tax advice.