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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10427
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I was a resident of Calif but moved to Wash State in May 2013.

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I was a resident of Calif but moved to Wash State in May 2013. I retired from Calif school principal job in Jan 2013 and received a $25,000 incentive to retire early. Received the $25k in Sept 2013 long after leaving Calif but they withheld Calif State income tax. I believe taxes are based on when you receive money not when it is earned. They say I need to fill out Calif W/H exemption certificat form 590 -- but that form does not apply to indiviuals. What can I do to have them not count the $25k as Calif income and refund the state taxes they withheld?

Lane :

Lets start with the worst case scenario: This attorney has an excellent record getting the CAFTC to be reasonable:


http://www.bragertaxlaw.com/success-stories.html

Lane :

Howeve,r ti do believe there is an individual certificate ... give me just a moment

Lane :

You are correct by the way.. (Federal law passed, I beieve in '96 sayng that pensions will be taxed in state of residence)

Lane :

now, just a moment

Lane :

Here's the Law, still looking for something from CA

Lane :
(a) No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State (as determined under the laws of such State).


4 U.S.C.A. § 114 (West)

Lane :

Can you tell me how the check was titled? DO you per chance still have the stub?

Lane :

Your argument WILL need to turn on this being classified as a pension check

Lane :

YOu may want to try to get documentation (if you do no already have it) that this is considered as a PART OF your retirement benefits

Customer:

The check was written to my name and to my new address in State of Washington. Check was titled Retire Incentive. It was not the monthly retirement checks now receiving without Calif state tax being withheld but was part 2 of two $25,000 incentive pays for regiring early. The first incentive check was received in January 2013 while still a resident of California.

Lane :

Understand ... There are several issues, but just to help you see around some corners their argument will be (if they make it) that this is not retirement income but rather a retirement incentive (earned in CA, therefore what's called "California Source Income.") ... Your argument will be that this one part of a total retirement package, therefore taxed in your state of residency

Lane :

under 4 U.S.C.A. § 114 (West)

Lane :

Part V of form 588 has an "other" section that is the place to state your case

Lane :

You will attach a statement

Lane :

Quite honestly this may BE worth getting the attorney I first mentioned to help with this .... not necessarily legal action, but write letter, process form with cover, etc ... I can tell you that from my perspective here, CA FTB is very aggressive

Lane :

I have no association, just know of his track record with these kinds of issues : http://www.bragertaxlaw.com/

Lane and 2 other Tax Specialists are ready to help you


Thank you David...

Another concept important is the doctrine of constructive receipt.

You might want to give this a read as well.

http://biztaxlaw.about.com/od/taxplantips/f/Year-End-Income-And-Expense-Timing-Issues.htm

Let me know if can help further

Thanks again

Lane