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Lev
Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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I have lived in California my whole life. I have retired and

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I have lived in California my whole life. I have retired and have no sources of income from California.   I plan to buy a house in Las Vegas at the end of this year and sell my California house early next year.   I will move my stuff into the Nevada house, change my voter registration, and register my cars in Nevada (all in January of 2010).   The catch is that I will likely marry a woman who lives and works in California sometime next year.   I will spend over 50% of the year living in Vegas.   We will have no community property or income (she has a California house in her name). From what I have read, we could file a joint federal return in 2010 and separate returns for California and Nevada because of our different residencies.   How likely is it that California will have a problem with this?
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

The income i s generally taxed based either on the source of income or on the residency of the recipient of the income.

If you sell your house in California - and it was used as your primary residence at least two-out-of-last-fife-years before the sale - the gain - up to $250,000 will not be taxable.

If you do not qualify for exclusion or your gain will be above the limit - it will be taxable for California because it is considered from California source.

 

If you plan to change your residency - for tax purposes the IRS dictates that your primary residency is where is your main home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Those factors include the following.
Your place of employment.
The location of your family members' main home.
Your mailing address for bills and correspondence.
The address listed on your:
--Federal and state tax returns,
--Driver's license,
--Car registration, and
--Voter registration card.
The location of the banks you use.
The location of recreational clubs and religious organizations you are a member of.

Please see IRS publication 523 for details - http://www.irs.gov/pub/irs-pdf/p523.pdf

 

Each state may have its own determination of residency for tax purposes. Thus for California - your residence is usually the place where you have the closest ties in compare with your ties elsewhere. In using these factors, it is the strength of your ties, not just the number of ties, that determines your residency. A partial list of the factors to consider:

  • Amount of time you spend in California versus amount of time you spend outside California;
  • Location of your spouse and children;
  • Location of your principal residence;
  • Where your driver's license was issued;
  • Where your vehicles are registered;
  • Where you maintain your professional licenses;
  • Where you are registered to vote;
  • Location of the banks where you maintain accounts;
  • Location of your doctors, dentists, accountants, and attorneys;
  • Location of the church, temple or mosque, professional associations, or social and country clubs of which you are a member;
  • Location of your real property and investments;
  • Permanence of your work assignments in California; and
  • Location of your social ties.

You may review FTB Publication 1031 - http://www.ftb.ca.gov/forms/2008/08_1031.pdf

Let me know if you need any help.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23202
Experience: Taxes, Immigration, Labor Relations
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