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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Can I avoid paying California state income tax on a windfall

Resolved Question:

Can I avoid paying California state income tax on a windfall even if I move in November to Florida and establish residency there? I can delay disbursement of the windfall for up to 30 days giving me time to become a domiciled resident of Florida.
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

Megan C :

Thanks for your question. My name is XXXXX XXXXX I would be happy to help you today

Megan C :

How are you today?

Megan C :

I Understand that you would like to legally avoid paying tax in California on a large sum of income you will receive.

Megan C :

California publication 1031 will help you establish whether you are a resident or non resident in California

Megan C :

You are a resident if you are domiciled in California. If you are domiciled in Florida, then you would be a Florida resident

Megan C :

So, if you can move to Florida and get domiciled there, you would not be domiciled in California

Customer:

Thank you...yes I am now a resident of California but am ready and able to move to Florida immediately. I have a house ready to rent

Megan C :

The publication can be found, HERE

Megan C :

Now, will you still own a home in California? Or are you going to move permanently

Customer:

I own a home but am listing it for sale today and I own a yacht that I listed for sale yesterday

Megan C :

Okay so those things are for sale, so you are leaving. Some people try to avoid tax by going somewhere like Florida and renting for 2-3 months then coming back. That would not work.

Megan C :

You have to be leaving CA permanently

Customer:

I understand...not to say I would not hate the heat and humidity after a couple years and move back but that is not the plan

Megan C :

Couple of years is a different thing.

Customer:

the plan is to move, rent a house for 6 months, buy another yacht and cruise the bahamas for a year or so

Megan C :

You can leave and go back.

Megan C :

Florida is nice, you should like it.

Megan C :

Oh that sounds nice! Take me with you! LOL

Customer:

so...if I move say this weekend

Customer:

and

Megan C :

We're going to Florida for Christmas. We live in TN

Megan C :

If you moved this weekend and set up domicile, then as soon as you set up domicile in Florida you would be a Florida resident

Megan C :

So, your income would be taxable to Florida, which has no state income tax

Customer:

establish residency and do all the things I should to become a resident then call my paymaster in Atlanta giving them new bank account info, addresses etc...that money received will not be taxed by California...correct?

Customer:

I have a nephew in Chatanooga...he loves it there

Megan C :

That is correct, but keep good documentation of the steps you took to put up domicile in Florida. California is really bad at trying to claim you owe tax there

Megan C :

I'm on the opposite side - Memphis area, it's okay. I prefer Arkansas.

Customer:

I have heard that...with the amount of $$$ we are talking about I am sure they will try

Megan C :

Yes, so keep good documentation of all the steps you took.

Customer:

I have had a difficult time establishing a conversation with tax professionals in Florida because of the $$$ amount...

Megan C :

It may even take having a professional get involved ... but, let's keep our fingers crossed that it won't happen.

Megan C :

The tax pros in Florida are scared of the large sum of money?

Customer:

nobody could answer my question regarding actually up and leaving...

Customer:

they seem to be when you are calling from California with a hypthetical

Megan C :

Oh I see. I understand. But, the publication I linked to gives you all the information you need to determine the fact pattern

Customer:

My tax guy here didn't seem to be very sure about it

Megan C :

Actually for this I would go with a California professional ... they are used to dealing with California

Customer:

I will review it...thank you!

Customer:

hmmm....good idea

Megan C :

If the time comes, you need a pro, I'd look back in CA

Customer:

Can you recommend anybody in the Southern Cal area

Megan C :

I'm truly sorry, but I'm not allowed to make recommendations on the site

Megan C :

It keeps the site free of people just looking to advertise :-)

Customer:

understood...

Customer:

Well....I think you have been a great help

Megan C :

Is there anything else I could help you with today?

Megan C :

Glad to hear it!

Customer:

First time I have ever done anything like this....thank you!

Megan C :

If you would, before you leave, please rate me positive. That's how I receive credit for assisting today

Megan C :

You're certainly welcome.

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 2 other Tax Specialists are ready to help you

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Megan C
Megan C
8219 Satisfied Customers
Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level