7 ms·

Why do you still pay taxes in California? Do you have a residence there?

by beowulfey 6y ago

setpatchaddress 6y ago
CA Tax Board is pretty aggressive: if you work for a business located in CA, they want your income.
- JKCalhoun 6y ago
  Yes, you need to retire outside California.
  - kelnos 6y ago
    Which is often just not that necessary... must people's income levels in retirement are low enough that CA's income taxes are competitive with many other lower-tax states (not those with no income tax, though, of course).
  - Cookingboy 6y ago
    That's just not true. You can fully move and start working for a non-CA company and you wouldn't be paying CA taxes. You make it sound like if you ever lived in CA you have to pay CA tax for the rest of your life until you retire lol.
- alpha_squared 6y ago
  I recognize this is just my personal experience, but this doesn't hold true for me in the slightest. I grew up and lived in CA for over two decades, but now located in a state with no income tax and employed by a company in the bay area. I pay zero state income tax, as do all my coworkers in the area.
- claydavisss 6y ago
  I work for a CA company and work in TX. I do not pay CA taxes, and my taxes are prepared by an accountant.
toast0 6y ago
If you have RSUs that were in while you were working in California or a resident of California, the Franchise Tax Board claims a portion of the income as California source when (if) they finally vest. That could be years later, when you're no longer a resident. If you move from California to another country, and are subject to US Federal Income tax, and don't qualify for an exemption, the Franchise Tax Board still considers you a resident of the state, and as such, taxes you on your worldwide income; as you did not end your residency by establishing residency in another state.
- cft 6y ago
  What if you have your own CA LLC? Would they require paying a tax on its sale even if it's re-incorporated in another state?
- ghaff 6y ago
  In this case, one also assumes that Musk will continue to spend a fair bit of time in the state. Low-profile people can usually get off with just paying taxes in their home state even though they spend a lot of their time at company offices, conferences, etc. elsewhere. But presumably there is some threshold beyond which you're supposed to be filing taxes in other locales.
  - njarboe 6y ago
    New York city has its own income tax rate of 3.9% for high earners. This can be quite a bit of money for hedge fund managers/owners. I've read that some of them live outside NYC to avoid the tax but need to hire a full time person to document and make sure they are not counted as a NYC resident by the city. You can only spend so many nights in NYC and not be counted as a resident, show proof of you being somewhere else, etc. Income taxes has so many bad consequences. It would be great to ban it and replace it with land value taxes.
    - ghaff 6y ago
      The letter of the law in a lot of places can be even worse than that. [1] There's been federal legislation proposed but AFAIK, nothing has been passed. A lot of states theoretically require you to file a tax return even if you only travel there for a day. Of course, I'd be shocked if pretty much anyone complied with that for sometimes travel. But it means lots of people are basically committing tax fraud; many/most probably don't even know they are. [1] https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2013/12/12/road-warrior-state-income-tax-laws-vary-widely https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...

Why do you still pay taxes in California? Do you have a residence there?

setpatchaddress 6y ago

CA Tax Board is pretty aggressive: if you work for a business located in CA, they want your income.

JKCalhoun 6y ago
Yes, you need to retire outside California.
- kelnos 6y ago
  Which is often just not that necessary... must people's income levels in retirement are low enough that CA's income taxes are competitive with many other lower-tax states (not those with no income tax, though, of course).
- Cookingboy 6y ago
  That's just not true. You can fully move and start working for a non-CA company and you wouldn't be paying CA taxes. You make it sound like if you ever lived in CA you have to pay CA tax for the rest of your life until you retire lol.
alpha_squared 6y ago
I recognize this is just my personal experience, but this doesn't hold true for me in the slightest. I grew up and lived in CA for over two decades, but now located in a state with no income tax and employed by a company in the bay area. I pay zero state income tax, as do all my coworkers in the area.
claydavisss 6y ago
I work for a CA company and work in TX. I do not pay CA taxes, and my taxes are prepared by an accountant.

toast0 6y ago

If you have RSUs that were in while you were working in California or a resident of California, the Franchise Tax Board claims a portion of the income as California source when (if) they finally vest. That could be years later, when you're no longer a resident. If you move from California to another country, and are subject to US Federal Income tax, and don't qualify for an exemption, the Franchise Tax Board still considers you a resident of the state, and as such, taxes you on your worldwide income; as you did not end your residency by establishing residency in another state.

cft 6y ago
What if you have your own CA LLC? Would they require paying a tax on its sale even if it's re-incorporated in another state?
ghaff 6y ago
In this case, one also assumes that Musk will continue to spend a fair bit of time in the state. Low-profile people can usually get off with just paying taxes in their home state even though they spend a lot of their time at company offices, conferences, etc. elsewhere. But presumably there is some threshold beyond which you're supposed to be filing taxes in other locales.
- njarboe 6y ago
  New York city has its own income tax rate of 3.9% for high earners. This can be quite a bit of money for hedge fund managers/owners. I've read that some of them live outside NYC to avoid the tax but need to hire a full time person to document and make sure they are not counted as a NYC resident by the city. You can only spend so many nights in NYC and not be counted as a resident, show proof of you being somewhere else, etc. Income taxes has so many bad consequences. It would be great to ban it and replace it with land value taxes.
  - ghaff 6y ago
    The letter of the law in a lot of places can be even worse than that. [1] There's been federal legislation proposed but AFAIK, nothing has been passed. A lot of states theoretically require you to file a tax return even if you only travel there for a day. Of course, I'd be shocked if pretty much anyone complied with that for sometimes travel. But it means lots of people are basically committing tax fraud; many/most probably don't even know they are. [1] https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2013/12/12/road-warrior-state-income-tax-laws-vary-widely https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...