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My wife, son, and I have been living in California and have…

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My wife, son, and I...
My wife, son, and I have been living in California and have filed joint federal and CA income tax returns for 2014, 2015, and 2016. During those years I was the only income earner and via W-2 wages.
I purchased a house in Texas on January 10, 2017 and have been running an IT consulting business from that location. This IT consulting business income was our only income during 2017 and I estimate it will be about $200K by year-end.
I lived in my house in Texas for 185 days during the year but my wife and child stayed in California. I do have a Texas Drivers License and have paid the real estate and utility bills during the year (and have proof).
Since I have lived in Texas for more than 1/2 of this year can I use that address as our primary residence on our joint federal tax return and do I still have to pay California state income tax even though that state is no longer my primary residence and I earned no income from California? Does the fact that my son goes to public school in California put me on California's radar screen for a state income tax audit?
Submitted: 8 months ago.Category: Tax
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11/14/2017
Tax Professional: Tax.appeal.168, Tax Accountant replied 8 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,751
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Tax Professional: Tax.appeal.168, Tax Accountant replied 8 months ago

While you can use the Texas address as your primary address, for tax purposes you are considered a part year resident for TX and a part year resident for California and you will still need to complete a California state tax return. To be on the safe side, make sure that you have officially established your domicile in Texas before claiming that you are a resident there. Refer to the following link for more detailed information on establishing your residency in another state for tax purposes.

https://gardinercpa.com/2017/05/establishing-residency-for-state-tax-purposes/

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How California taxes residents, nonresidents, and part-year residents

  • California residents - Taxed on ALL income, including income from sources outside California.
  • Nonresidents of California - Taxed only on income from California sources.
  • Part-year residents of California - Taxed on all income received while a resident and only on income from California sources while a nonresident.

REFERENCE SOURCE:

https://www.ftb.ca.gov/individuals/filertn/nonresidents-part-year-residents.shtml

Q: Does the fact that my son goes to public school in California put me on California's radar screen for a state income tax audit?

A: Not necessarily because it is not unusual for a taxpayer and their spouse to live in different cities and the dependent can live with the spouse.

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