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Lane
Lane, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3630
Experience:  Providing Financial & Tax advice since 1986
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In order to avoid personal income taxes in California, I plan

Resolved Question:

In order to avoid personal income taxes in California, I plan to take up residency in Nevada. Is there a time limit to change residence and not pay California personal income tax? When I retire next year from a job in California, how do I avoid the state from taxing job income, pension, IRA withdrawal in 2014?
Thank you for your time and opinion. JL
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor : Hi, The way to think this through is in two areas, (1) What California says defines a resident, apart year resident and non-resident and (2) Keep the tax year in mind
NPVAdvisor : FTB Publication 1031, Guidelines for Determining Resident Status is what you'll want to use to make the case
NPVAdvisor : If you'll hang on just a sec, they've put much of this on their web site, but quoting their own publication is what will always win out
NPVAdvisor : From: https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents_PartYear_Residents.shtml
NPVAdvisor : A California resident is any individual who meets any of the following:Present in California for other than a temporary or transitory purpose.Domiciled in California, but located outside California for a temporary or transitory purpose.Domicile is defined for tax purposes as the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment. It is the place where, whenever you are absent, you intend to return.For a complete definition, refer to "Meaning of Domicile" in Publication 1031 - Guidelines for Determining Resident Status.A nonresident is any individual who is not a California resident.A part-year resident is any individual who is a California resident for part of the year and a nonresident for part of the year.
NPVAdvisor : sorry terrible formatting transfer ... let me give that to you one bullet at a time:
NPVAdvisor : .
NPVAdvisor : A California resident is any individual who meets any of the following: * Present in California for other than a temporary or transitory purpose. * Domiciled in California, but located outside California for a temporary or transitory purpose.
NPVAdvisor : Then they go further, on what Domicile is ...
NPVAdvisor : Domicile is defined for tax purposes as the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment. It is the place where, whenever you are absent, you intend to return
NPVAdvisor : ...
NPVAdvisor : SO, moving before the tax year is out (if that were possible) would be the ideal ... and even then ...
NPVAdvisor : Money received from a California organization would be considered C"CA source income" and be taxed to you as a NON-resident IF you perform those services in California ... See this:
NPVAdvisor : FOr NON-Residents ... Wages and salaries have a source where the services are performed. The source of this income is not affected by either of the following:The location of the employer where the payment is issuedYour location when you receive paymeno
NPVAdvisor : And finally,
NPVAdvisor : Residents - Include all wages and salaries earned while a resident, regardless of where the services were performed.Nonresidents - Include the income for services performed in California.
NPVAdvisor : Once you have residency established, they can't tax IRA distributions OR pensions because you're not a resident
NPVAdvisor : Things that I have seen affect how they will make the determination are:
NPVAdvisor : Where you get your mail, have a residence established in NV, going ahead and putting the house in CA up for sale in 2013
Customer: So, Living in NV, my soc sec, pensions and IRA's would not be taxed but only work or continued part time work performed in CA WOULD BE ELIGIBLE TO BE TAXED?
NPVAdvisor : That's correct, no state tax in NV and CA only taxes CA source income for non-residence and THAT's determined by where the services are performed
Customer: Can't I own property in CA? Do I have to place our CA home in my wife's name?
NPVAdvisor : If, for example you worked on assignment in California, they will say you have to file a Non-REsident return and pay tax on THAT income
NPVAdvisor : So sorry to be the messenger here, CA is very aggressive ... It will come down to where the residence is
NPVAdvisor : you can own INVESTMENT property ... and in that case you only have to pay tax on a portion (over an exclusion amount) on the rental income
NPVAdvisor : Back to Pub 1031, its ...Domicile is defined for tax purposes as the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment. It is the place where, whenever you are absent, you intend to return
NPVAdvisor : Those are the words that you must show do not apply
Customer: Thanks. I understand. I'll do more research in Pub 1031
NPVAdvisor : PLease don't shoot the messenger here (Hopefully having all the facts will help you to "see around some corners." ... You're wise to ask ... Some learn just how aggressive FTB is the hard way.
Customer: I appreciate your insight. JL
NPVAdvisor : If you DO establish a residence (even rental) in NV, and have the family Wife) in the house in CA, then the task is to prove that you've moved and are only trying not to lose value on the home sale
NPVAdvisor : In THAT situation, it will come down to that "no intent to return" piece
NPVAdvisor : Less clear, but that's the task.... showing you've effctively changed domicile
Customer: Understand.
NPVAdvisor : Spend some time here ... and there's link to the file Publication 1031 there too ... THat's you rubrik, your checklist
NPVAdvisor : https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents_PartYear_Residents.shtml#compensation
Customer: Great advice!
NPVAdvisor : Thanks, XXXXX XXXXX luck with it
NPVAdvisor : Congrats on the retirement
NPVAdvisor : If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better. That's the only way they will pay us here.
Lane, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3630
Experience: Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.


Thanks James,

If I can help further let me know.

And if you'd like to use ME again, just say "For Lane only," at the beginning of your question.


Thanks again,
Lane

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