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I received a notice from the California Franchise Tax board

Hi JA: Hi. What do you...
Hi
JA: Hi. What do you want help with?
Customer: I received a notice from the California Franchise Tax board saying I owed a balance from 2012
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: It said I failed to file a return by the due date
JA: Is there anything else the Accountant should be aware of?
Customer: Yes... I was living overseas in Korea. I filed my taxes with the IRS for 2010, but I owed nothing state and federal then. I thought I did not have to file for taxes after that (what I heard) and did not file taxes since then. I moved back to the US this spring But I am from iowa and have not been to california for the last 10 years.
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Customer reply replied 9 months ago
I may have sold some stocks in 2012 (I can't remember if it was that year or not). I lost money on my stocks overall (so I assumed I wouldn't be taxed on them). I'm wondering: Is California collecting this on behalf of the IRS? Or is this a mistake where they think I owe state taxes? Can I get this balance waived or reduced and what do I need to do to square myself with the IRS from here on out?
Answered in 7 minutes by:
2/22/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,007
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name's Lane. I can help here.

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As a US citizen you have to file and pay tax on all worldwide income, regardless of where the income is generated or where you live.

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HOWEVER, a state only has jurisdiction to tax under two diufferent circumstances:

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(1) You are a resient of that state, or

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(2) You earned income Form that state (worked there, had assets such as a rental property there that generated rents, etc.)

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If you can show California that you were no oonger a resident and did not intend ever to return, they have no authority to tax you

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Sorry, looks like our posts crossed there ... let me read while you read mine

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Customer reply replied 9 months ago
Okay
Customer reply replied 9 months ago
If we talk about this on the phone is the total amount $52? Or is that in addition to the $33(?) for the chat

OK, as far as IRS goes, you need simply to file, so that you can shw that there was a loss *you can get your transcripts here, to see what income war reported on you: https://www.irs.gov/individuals/get-transcript

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As far as California is concenred you need to answer them that you haven't been a california resident since XXXX

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Sorry the site throws that call offer out there ... It IS an additonal $52 and we can go as deeply as we need that way.

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BUT just ignore if you'd like to continue here

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Still with me?

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Customer reply replied 9 months ago
Okay I think continuing with the chat.Is there an special filing procedure for filing past taxes with the IRS when I worked over sees. (I know I was below minmum foreign earned income each year)What counts as an answer to California? I don't have IRS documents to send them.

For IRS, no, you simply need to file IF (1) your income was over the filing threshhold (standard deduction of 6000 or so - goes up a little every year - plus the perssonal exemption of 4000 ...

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OR

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(2) you had a stock or other capital assset sale where you need to show them that you had basis, so they won't count ther entire sales proceeds as a gain.

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And on california, if you weren't there, you dont NEED to file ... just reply to the notice that you moved permanenet ly from there in XXXX

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So, in years where there was no stock sale, if you were under 10,000 in income you don't need to file with IRS at all.

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And you don't file with California unless you were a resident.

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If that stock sale was in 2012 and you DID live in California that year, then just use turbotax or another program to do your Federal taxes and the state will flow FROM that

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And if the stock was for a loss they will see that there's nothing owed

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There's no non-fiing penalty fs you owe nothing

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Customer reply replied 9 months ago
Great.I talked to someone on the phone from California and they wanted to see proof that I had. I told them that I did not think they had any jurisdiction over me and I wanted to ignore it, but they sounded kind of threating when the said "go ahead then"BTW, I was NEVER a California resident...I was there for a few days on trips (last time in 2000) You are sure CA can't be collecting on behalf of IRS?
Customer reply replied 9 months ago
I just don't know why CA is sending me a notice that I owed $1,300 in tax in 2012.

Yep you were just talking to a collector.

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And yes, both can collect for each other...

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Butn the facts are that if you are below the filing threshhold for earned income and your only asset sale was a loss, you HAVE no tax liability.

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And it;s VERY rare that CA would be collecting for IRS, AND their communications would have said that if they were.

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It's MORE common for IRS to capture a federal refund to pay state taxes owed

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What california is doing, most likely, is making some assumption that you were a california resident (maybe the brokerage statement was a CA address) ... and as with all taxiung authorities making the assumption that the sales proceeds were all gain (until you show them differently).

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But if you were on there for a few days, then THAT's a very different issue... you don't owe them unless you were a resident or had california source income

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Further ... if you have never been a resident why would they be collecting for IRS... (just doesn't work that way). IRS collects for IRS

...

...

Please let me know if you have ANY questions at all, before rating me

But if this has helped, (and you don’t have other questions), I would appreciate a positive rating - using those stars on your screen – and clicking submit.

That’s the only way JustAnswer will compensate me for the work here.

Thanks,

Lane

I hold a law degree, concentrating in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice on three continents, since 1986

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,007
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
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Customer reply replied 9 months ago
Awesome...that is super helpful. I really appreciate it. I will file with the IRS for any year I sold taxes and leave it at that .
Customer reply replied 9 months ago
sold stock...

That will do it.

...

Thanks for the rating

...

Lane

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,007
13,007 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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