11 ms·

Moving Avoids California Tax? Not So Fast

128 points by dmitrygr 5y ago

vmception 5y ago
Although state income/capital tax is not deductible right now, after the $10,000 cap, you can still lower your AGI to zero or negative from the usual concoctions, which leaves nothing to tax, that way.
- asdfasgasdgasdg 5y ago
  There are no usual concoctions that will get a normal high-income wage-earner to zero. If you have an unusual situation or are retired that's a separate issue, but even then it's not as easy as people make it sound.
  - vmception 5y ago
    Right, no use in talking about it, just let ProPublica “leak” tax techniques two decades late, per usual Wage earners do have the worst circumstance. The slowest and highest taxed way of getting money and it has a general ceiling. And they don’t have access to half of their earned capital that year to even attempt doing anything with it, Yuck. There is still a lot they can do.
    - deleted 5y ago
      [deleted]
pxeboot 5y ago
Since California has a reputation for it's high taxes on almost everything, I was surprised to learn their State budget is pretty average on a per capita basis [1]. [1] https://en.wikipedia.org/wiki/List_of_U.S._state_budgets https://en.wikipedia.org/wiki/List_of_U.S._state_budgets
- whoisburbansky 5y ago
  Could it be that CA receives less in federal aid per capita than the average state
  - akhosravian 5y ago
    I think its more likely that the state's rules on increasing property taxes hamstrung its ability to raise revenue through the increasing property values in the state. Instead they make up the difference through other means of taxation.
    - bingohbangoh 5y ago
      Aren’t property taxes only paid to local municipalities? Pretty sure it’s that way in NJ at any rate
      - asdff 5y ago
        It's complicated in CA. Yes, they stay local in the county and are meant to fund education. The caveat is that due to proposition 13 property taxes no longer are able to fund education completely and the state has to step in to cover the gap, so property taxes have a large impact on the state budget. https://lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx https://lao.ca.gov/reports/2012/tax/property-tax-primer-1129...
    - toomuchtodo 5y ago
      Those who work are subsidizing those who own property.
      - xibalba 5y ago
        Those are not mutually exclusive sets. In fact, one is pretty close to a subset of the the other.
        5y ago
kyleee 5y ago
I love the list of recommendations, including: > Notify friends and family of permanent move out of California Make sure to send it certified mail, return receipt requested and save the records!
asdfasgasdgasdg 5y ago
I know that we have a tendency on this site to oversimplify things, but if you read the list of things you have to do to demonstrate residency elsewhere, it really is quite simple. If you actually live elsewhere like a normal person and are only back in California occasionally for vacation, you're at little risk of being audited and even less risk of being assessed taxes. The problem comes in when you try to have your cake and eat it. For example, you might run into trouble if you're trying to work and live in Cali five months and thirty days a year without paying California taxes. I know for me, as a relatively high income individual, the FTB did not even make a peep about our residency change. They didn't even ask for any documentation, to the best of my recollection.
- kenhwang 5y ago
  The big one is if you still work for a company that only has Californian offices that requires you to visit for work. That's the leash a lot of tech workers will find hard to break.
  - asdfasgasdgasdg 5y ago
    Yes, being a frequent aerocommuter in an income tax state like CA is of limited use, when it comes to avoiding taxes. To me, this is a feature, not a bug. I don't want people causing massive pollution by flying back and forth to the office each week to avoid taxes. It's definitely not something that we should encourage.
    - carlivar 5y ago
      Whew definitely don't look at Elon Musk's private jet usage in that case.
- cascom 5y ago
  Count yourself lucky. I’d say it was California that was behaving that way…unless you take the position that you can be a resident in multiple states…in which case you should be able to vote in multiple states, claim unemployment in multiple states, have driver’s licenses in both states etc.
ineedasername 5y ago
Basically you can't claim to have left California if you (even inadvertently) still have significant legal ties to the state. And probably not at all if you spend 9 months a year there. If you move, deliberately cut all official ties like license, voting registration, storage units, etc. All of which makes sense: if you're moving these are things you should do anyway. It's likely that California is probably much more strict in chasing down these details because its high tax rate makes it attractive to have a legal residence in one state while mostly still operating out of CA.
- culturestate 5y ago
  The California FTB is the most exhausting tax authority I've ever dealt with. I have a virtual mailbox in LA and made what I now know to be a tragic error in using it as my address for one single 1099 contract around seven years ago. They sent me a tax demand notice, and despite repeatedly proving to them that not only was I not a California resident at the time but that I wasn't even resident in the United States at the time, they're still after me for their ~$50. I refuse to pay it on principle, so I've just resigned myself to the knowledge that I'll get a letter from them every spring until either I die or California secedes.
  - dragonwriter 5y ago
    > I refuse to pay it on principle, so I've just resigned myself to the knowledge that I'll get a letter from them every spring until I die or California secedes. Why would California seceding have any effect?
    - crocodiletears 5y ago
      A crater can't collect taxes, maybe?
  - thehappypm 5y ago
    You should listen to Mike Birbiglia's "My Girlfriend's Boyfriend." In it he tells a story about how he's T-boned by a drunk driver, but due to paperwork issues, he's on the hook for the damages to his rental car. It becomes an obsession for him, until his girlfriend makes him realize that being right is not as important as being happy, and he just lets it go and pays to make it go away and stop sucking his happiness out of his life.
swiley 5y ago
I wish we could just give California to Canada, maybe trade for something cool like the Yukon.
- professoretc 5y ago
  So trade away something that produces 70% of the nation's food, for something that produces none?
- tomc1985 5y ago
  I'm not sure "biting the hand that feeds you" gets more literal than this. Not only do we feed you, but we're one of the few states that gives more than we take. Have fun rotting in mediocrity without us.
  - refurb 5y ago
    Once the water runs out you won’t be feeding anyone.
    - tomc1985 5y ago
      Desal's some pretty great tech
      - swiley 5y ago
        Just keep pumping that Co2 into the air for the rest of us why don't you
- dennis_jeeves 5y ago
  Any takers for Quebec?
- AtlasBarfed 5y ago
  https://slate.com/news-and-politics/2001/03/let-s-ditch-dixie.html https://slate.com/news-and-politics/2001/03/let-s-ditch-dixi... Let the South Secede!
eplanit 5y ago
I have several neighbors who have fled California (smart bastards), and they knew to make it a very clean break. First get an apartment in another state; move bank accounts to new "state" bank in new state; get a new driver's license in that state; ensure employment address and all "official" addresses are changed, along with any and all other correspondence that's possible; sell house and/or car -- leave, leave, leave. Any reason they can find to make any association to the state, they will; and, like TFA says, the burden is on YOU to prove you DON'T live here.
- pc86 5y ago
  These are all things you should be doing anyway if you're moving so it's not a particularly high bar to meet. And as with most things, the burden is on you to the extent that you want to actually prove them wrong. If you don't find yourself going back to California and you're willing to get a nasty letter from them every now and then, it's really a non-issue even if they firmly believe you are/were a California resident. They can't lien property outside of the state. If they put something on your credit report, you can dispute it with the reporting agency (who are much more likely to be reasonable than some FTB bureaucrat). Yes it can be a pain in the ass but I don't think it's nearly as big of a hurdle as TFA is making it out to be.
  - cft 5y ago
    I went to MIT long time ago and have an MIT credit union account. Am I a Massachusetts tax resident then? Or should I shut it down.
    - silverpepsi 5y ago
      A long time ago sounds like you're well past the point of getting audited by the state of Massachusetts. So it might have made sense to be safe two or three years after the departure, it's unlikely they pop up on you now with an audit
  - mixmastamyk 5y ago
    If your bank is under the influence of CA it can still be a problem. Something to keep in mind.
cascom 5y ago
New York is similar, a naked cash grabs, to support unsustainable and irresponsible fiscal policies.
- seattle_spring 5y ago
  Oregon as well.
jandrewrogers 5y ago
It is not just moving out of State. California also requires former residents to pay taxes if they move to another country, even if you live overseas for the entire year. Before moving to another country, many people transfer their residency to a State that places no obligations on people that aren’t actually in the country.
- dheera 5y ago
  How do you transfer residency? Do you actually have to live there, or can you rent an AirBNB in Puerto Rico for a month?
  - bingohbangoh 5y ago
    It’s typically 183 days. https://blog.monaeo.com/the-183-day-rule-5-things-to-know-when-establishing-state-residency-and-fighting-audits https://blog.monaeo.com/the-183-day-rule-5-things-to-know-wh... https://www.investopedia.com/terms/1/183-day-rule.asp https://www.investopedia.com/terms/1/183-day-rule.asp
  - jandrewrogers 5y ago
    Some States have residency programs specifically targeted at nomads and expats that do not have a fixed address in the country. You don’t have to live there, you just need to show up in person to do all of the usual paperwork to establish your citizenship in that State. South Dakota is famous for this but a few other States are also popular. From the State’s perspective they are generating a bit of revenue from someone who otherwise consumes no resources, so it is a good deal for both parties.
    - infinite8s 5y ago
      Can you do this after you've moved to the other country (ie just take a few days trip to ND and move your residence from CA to ND)?
  - OminousWeapons 5y ago
    You have to fulfill the residency requirements for state X while also not looking like you live in state Y. Like another poster said, you can go to South Dakota for literally a day or two and fulfill their residency requirements, but that is not likely to be enough for tax purposes. You should be employed by a company registered in that state; you should have a physical mailing address in that state (e.g. a PMB); you should file a USPS change of address form listing your new mailing address as your official address and change your registered address with service providers like banks and telecom; you should avoid spending more than 182 days per year in any other state as another poster mentioned; etc.
rahimnathwani 5y ago
Imagine you live in California and get a job that pays you $X salary plus equity vesting at 1000 shares per year. After a year, you move out of California and continue at the same job. In year 1, you'll pay California taxes on the 1000 shares that vested at the end of that year. What about years 2, 3 and 4? You'd guess that you wouldn't pay any California taxes on those vest events. Because you 'earnt' those shares after you left CA. Not so fast. Because you were living in CA when those 4000 shares were granted (on a 4 year vesting schedule), you'll pay taxes on these proportions of each vesting event: Year 1: 100% (lived in CA since grant to vest date) Year 2: 50% (lived in CA for half the time between grant and vest) Year 3: 33% Year 4: 25% So, even though you lived in CA for only 25% of the time, you pay CA tax on over 50% of your shares.
- refurb 5y ago
  This is basically my understanding. Any income that could be connected to California will be subject to taxes. Or at least the FTB will try. I know some folks who left the state and got a “taxes owed” notice from FTB. They replied with “i haven’t set foot in CA for 3 years, I don’t owe anything” and the FTB dropped it. It’s basically the same as NY and NJ which does it’s best to get its pound of flesh.
  - lotsofpulp 5y ago
    NY is currently forcing employers to withhold income tax for people in NJ who have not been in NY in the last 18 months. I know quite a few companies who told their employees they will not stop withholding NY taxes from their income, and the issue is currently making its way through the courts. Edit: I missed this update, but apparently the SC told NH they cannot sue MA, so as far as I now, NY and MA have been cleared to continue collecting income tax from people not working in their states. https://www.cbsnews.com/news/supreme-court-wont-allow-new-hampshire-to-sue-massachusetts-over-income-tax-fight/ https://www.cbsnews.com/news/supreme-court-wont-allow-new-ha...
- paxys 5y ago
  Got a source for that? I can say with confidence that I personally know dozens of people who have moved out of state with granted but unvested RSUs from their companies and exactly 0 have paid any taxes to California for them.
deleted 5y ago
[deleted]
paxys 5y ago
So to escape the evil tax board after moving out of California you have to...do normal stuff that you are legally required or otherwise expected to do as a resident of a new state/city — like switching your drivers license, registering your cars, registering to vote, making your address change official, not spending >9 months of the year "visiting" California. Yes some well-intentioned people unfortunately get caught in this mess at times, but a far greater number are those who worked for a SV startup for years and conveniently moved to a no-tax state a month before IPO when all their stock became "real".
- rahimnathwani 5y ago
  I moved away from the UK over 10 years ago. I haven't: * cancelled my UK driving licence * cancelled my library card * changed the address on all bank accounts * cancelled my mobile phone contract ...
- naturalauction 5y ago
  I moved from California overseas. I haven’t gotten rid of my state id as I would like an American one to use when I’m in the US. I haven’t switched my voter registration (other than to say I’m overseas) as I have the legal right to vote at my last US address. I haven’t switched my official address registration (not sure what that is, presume you mean via usps) as it is a pain internationally and someone living at my old address can still send me any mail (lots of services won’t even take a non-us address). I don’t spend much time in California (less than a month so far in 2021) but I still have some income there. I don’t think my situation is unique, I just worry that one day the franchise tax board will attempt to collect taxes which they don’t deserve (I live in a country with a higher tax rate than California, I don’t think I’m trying to avoid any taxes).
  - matttproud 5y ago
    I was in a similar boat a decade ago. I read the FTB documentation (FTB 1031 Sect. E-L) carefully and just accepted it would be subjective criteria test in court if it ever came down to it. I started keeping immaculate records (motivated by the IRS' substantial presence test or bona fide residence test depending on the year and where the family was in terms of which country it was in — e.g., moving to another). The main points that were relevant — memory serves — were a permanent work contract in the new country and having dissolved housing contracts and similar in CA. My advice: if going abroad, aim to promote your residency status in the new country to "permanent residency" (cf. Green Card, Niederlassungserlaubnis, Niederlassungsbewilligung) over just being permitted either temporary or long-term (cf. Aufenthaltserlaubnis, Kurzaufenthaltsbewilligung). It takes some work to earn permanent residency over the others (e.g., being in good standing, language mastery, and ability to substantively demonstrate financial independence). The idea of earning permanent residency (in a place where it's difficult to earn it) and throwing it away to return to CA suddenly would probably appear preposterous in court in terms of FTB arguing that you're just away from CA temporarily. I kept a US driver license out of convenience in CA. Never was a problem, though I transitioned it to another state where I had family ties and a mailing address hear later. I kept my CA bank account out of practicality. It was the only bank I had dealt with out of about six in rapid succession that was supportive and friendly with my living abroad (e.g., power of attorney, wire transfers without being in-person). Voter registration in CA is fine per Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA). You are entitled your vote; what will differ is whether the state grants you purely federal or also local voting rights. You get federal at a minimum. UOCAVA is a bit hand-wavy with the criteria, so I did transfer my voter registration to the other state where I had the license. For the one year I was half-in California while also being abroad, I still filed taxes accordingly for that year for CA. IIRC, I might have even filed 0 in a CA FTB form for the next year. So: in short, multiple years with "weak" bureaucratic carryover ties in CA without issue, but ultimately transferred all matters aside from bank account to a state with deeper ties (even if living abroad). Never an issue. The real monster, which dates back to the US Civil War, is the need to pay and file taxes when domiciled abroad. You can then add FATCA on top of that as a cherry. The CA FTB is a dream compared to the IRS here. I’ve basically accepted that this situation won’t improve in my lifetime. Maybe my children’s.
deleted 5y ago
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justanother3 5y ago
"There, a nonresident sole proprietor performed all of his services outside of California. However, some of his customers were located in California. Is that enough for the poor guy to attract California tax liability? The California taxing authorities said he was operating a "unitary" business. Therefore, his tiny business was subject to California's apportionment rules." "The California Franchise Tax Board matched income records showing that he collected $40,000 of income from California companies. Not surprisingly, Bindley did not file a California tax return. That meant California’s statute of limitations would never start to run." So should out-of-state freelancers avoid taking on any CA clients?
- bingohbangoh 5y ago
  I know somebody in NYC who does exactly this. He refuses to take on any clients in California. This isn’t because NY is a picnic but because it limits his headache to one state.
- professoretc 5y ago
  It sounds like the nature of his business was such that CA thought he didn't have "clients" (plural) but rather a single client spread out over multiple states.
BurningFrog 5y ago
What if a hypothetical person moves to Reno, for real, buying a house etc, and continue to work remotely for their small SF based employer? Does it help that the employer has offices in 2 other states?
- refurb 5y ago
  If your employer (W2) is in CA you pay CA income taxes.
  - niij 5y ago
    Taxes are based on where the work is performed, not where your employer is located in all US states in aware of. So remote work solely out of your home in Reno, NV for a California company would have no state income taxes (since Nevada doesn't have state income tax).
    - lotsofpulp 5y ago
      There is a slight caveat currently if you were previously performing your work in a place that did tax: https://www.cbsnews.com/news/supreme-court-wont-allow-new-hampshire-to-sue-massachusetts-over-income-tax-fight/ https://www.cbsnews.com/news/supreme-court-wont-allow-new-ha...
MR4D 5y ago
> “19. Obtain new state phone numbers.” HA! I had to laugh when I saw this. I’d love to see this argued in tax court in the modern day. It would be hysterical.
- mywittyname 5y ago
  That's such a massive burden anymore, since so many services tie 2FA to phone numbers for some dumbass reason.
synergy20 5y ago
For years I have rejected _all_ contract and permanent jobs from CA for two reasons: 1. I don't enjoy filing state income tax(I'm a Texan) at all. 2. I have to get 13% higher pay comparing to what I earn in TX which CA-recruiters did not like it much at times. The 13% is to cover CA's state income tax.
- deleted 5y ago
  [deleted]
- Rebelgecko 5y ago
  I don't know your situation so maybe this actually is an issue for you, but I feel like it's worth pointing out that the 13% tax bracket is only on income beyond $1 million/year
  - lotsofpulp 5y ago
    Amazing how many people do not understand marginal income taxes.
- chris11 5y ago
  I don't do a ton of contract and I don't like CA taxes. But this seems slightly antagonistic. Hiring a CPA will make taxes easier, both of these can mainly be solved with more money. Why are recruiters negotiating with you about whether or not 13% is a far increase for being in CA? To me it seems like the high end for comp in Silicon Valley is much higher than the high end for comp in Texas. And 10-20% salary adjustment for an internal move between a MCOL city and Silicon Valley seems normal. I don't know your situation, but a 15% bump for working in CA sounds cheap in general.
- kenneth 5y ago
  You don't have to pay taxes in CA if you don't live there, even if a client is in CA. Unless you're talking about doing on-site jobs.
  - commandlinefan 5y ago
gumby 5y ago
What this crazy blog post ignores is that if you move away you lose all the benefits of living in California. Sure, you want to move and do so (or don’t want to but have to for some reason). You’re fine. This whole post is about wanting to get the benefits of being in california (9 months a year wtf) but not pay for it. And in the end, california taxes overall…are pretty average.
- djrogers 5y ago
  > And in the end, california taxes overall…are pretty average. Err, no - no they aren’t. By most accounts, it’s the highest or in the top 2-3 in the nation, and not by a little. California has the highest income tax, the highest capital gains tax, and the highest state sales tax. The only common tax rate in CA that’s even close to average is property tax. [1] https://worldpopulationreview.com/state-rankings/highest-taxed-states https://worldpopulationreview.com/state-rankings/highest-tax...
  - lotsofpulp 5y ago
    It depends what income band you are in: https://itep.org/whopays-map/ https://itep.org/whopays-map/ It is not useful to consider top tax rates for every state unless you are in the top tax rate income bands for every state.
    - willcipriano 5y ago
      A tax that starts at 90% for low income people and ends up at 2000% for high net worth individuals would be the one of the most progressive tax systems imaginable and yet would be completely unaffordable. The average percentage of earnings paid to taxes and governmental fees would be a better judge of this but that I've never been able to find data like that.
      - gumby 5y ago
        A reasonable proxy is state expenditure per capita. In the case of california, the state happens to collect a disproportionate amount from cap gains which helped in 2020 and caused a crisis in 2008. Also spending is higher per capita in the less densely settled (and predominantly Republican) portions of the state (most of it if you look at a political map) simply because the infrastructure is thinner and more critical and social services are more expensive to provide.
didibus 5y ago
Why is California taxes so high anyways? I feel they add up with the federal taxes to as high as in Canada, except that you don't get almost free education, subsidized child care, free health care, free meds, and year long parental leave.
- seattle_spring 5y ago
  They're so high because property tax is grossly unfair there. There are people with $10m homes paying taxes as if valued closer to $100k.
  - lotsofpulp 5y ago
    It is funny, CA actually has very progressive taxes…except prop 13 creating this giant loophole for land wealth where the older landowners are grandfathered into a highly regressive property tax. https://itep.org/whopays-map/ https://itep.org/whopays-map/
- nradov 5y ago
  Depending on how you count, California has about the 10th highest total tax burden among US states. But in terms of educational achievement and government services we're certainly not getting our money worth. The state government is now largely controlled by public employee unions who treat it as a cash cow.
- cmrdporcupine 5y ago
  No free meds in Canada. Well, not for most people. And no dental care coverage either. Just doctor/hospital care. Education isn't almost free. Annual tuition is $7k-$8k CAD ($6.5kish USD) a year. And subsidized child care is... dicey. Depends on province, etc. and unlikely to find availability. As for parental leave, could you live on $595 CAD ($472 USD) a week? That's the maximum... Not ideal in the Toronto area where the average for a 1 bedroom apartment is around $2000 CAD a month. It certainly helps a lot when you have a working spouse, but it's not enough to raise a child on your own. It's not a worker's paradise up here. It's better than it could be though.
BooneJS 5y ago
I left California 2 years ago, and I still have 2 years of taxes to pay on RSUs granted while a resident.
WalterBright 5y ago
> You can leave for Nevada, Texas, Washington or other no-tax states, Not anymore. Washington now has a 7% capital gains tax.
- 01100011 5y ago
  WA taxes capital gains profits which exceed $250k annually. The rate is also less than you'd likely pay in CA(max 13%?). Not great, but better than CA. The thing that gets me about WA are the insane liquor taxes(and higher base prices as well for some reason). OR isn't too far away though, and they seem to have reasonable prices despite the state liquor monopoly.
  - rdtwo 5y ago
    Starting next year yes
- lotsofpulp 5y ago
  WA now has a 1% income tax for W2 income in the form of 0.4% for family leave/sick leave/parental leave and 0.6% for long term care insurance (which is effectively a marginal income tax considering the state LTC insurance benefits are pathetic). They also snuck in a way for current residents to get out of paying the 0.6% LTC tax if you were heads up enough about already getting LTC insurance earlier this year, but anyone moving here after Oct 2021 is screwed.
  - rdtwo 5y ago
    Yeah LTC is a scam. I wish the courts would strike it down
softveda 5y ago
It just shows what a mess US taxation is. I am in Australia and we have a single federal income tax and GST and I am glad for that.
vburg 5y ago
You can check-out any time you like, but you can never leave.
shell0x 5y ago
As a non-American who lived in 6 countries and dealed with different tax offices in Asia/Pacific/Europe, the system sounds absolutely ridicilous to me.
- kellengreen 5y ago
  As an American living in London, you'd be correct, it's simply ridicilous.
  - shell0x 5y ago
    It’s almost as if your government wants to punish you for living abroad. On the plus side, America accepts dual citizenship and Germany(where I’m from) accepts not, unless I apply for a special permit to retain German citizenship before acquiring another citizenship.
wholien 5y ago
Anyone know how 83(b) elections (aka "early exercise") works with Californian tax? After the 83(b) election, if you fully vest all the early exercised shares in California, then move elsewhere for a year or more before selling, will California still tax the gains from that sale? On the one hand, I'm vesting the exercised shares whilst in CA. On the other hand, I've early exercised, so there is no realized gains until I've sold. So if I leave CA, renounce all ties to CA as the article says, then sell, will CA come after me? Is this analogous to buying a share of Google whilst a CA resident, then becoming a resident somewhere else and then selling that share of Google there? CA doesn't tax that... right?
- junar 5y ago
  The answer is in FTB Pub 1004. It depends on whether you sell NSOs, ISOs in a qualifying disposition, or ISOs in a disqualifying disposition. https://www.ftb.ca.gov/forms/misc/1004.html https://www.ftb.ca.gov/forms/misc/1004.html
AdrianB1 5y ago
Treat your citizens like cattle, not like pets. I cannot remember where I read this, but it kind of makes sense.
LinuxBender 5y ago
My tax attorney gave me a list similar to that, but it only had 19 items. I think the items I didn't see on the other list were birthday cards, clubs and social groups and heirlooms. They've had some clients get grief from the FTB but a phone call can sort it out. My attorney of course offered to do this for me. This is my last year in California so I guess I will find out how hard this is.
jjav 5y ago
CA is particularly bad but I've seen this from smaller states as well. I went to grad-school in PA (CMU). After graduating and moving out of PA, a couple years later PA demanded taxes on income I only earned after leaving the state. It amounted to only like $40 and I was afraid it'd cost way more to fight so I just paid it, even though it was a completly fabricated tax bill. Today I'd fight it just on principle but I was too poor then and couldn't afford to talk to a CPA or lawyer.
sershe 5y ago
I had an interesting experience with FTB... I returned to WA without changing jobs, after working in CA and getting some ISOs. The way it works is that you separate the income from the ISOs that don't meet holding reqs proportionally between certain dates. I.e. you pay CA taxes on the fraction of "wage" income earned in CA vs another state; and no CA taxes on the other portion, attributable to that other state. However, there's no form for that; so, for a few years I'd do the math in Excel, and then send FTB a form that looks like "here's my total income, and I pinkie swear this (much smaller) random-looking number is my CA income". What's interesting is sometimes I was too lazy to do proper math for some small sale transactions that were few days apart, so I'd round it in favor of FTB. And every year FTB would charge me as expected, and then send me a check for $20, $50 or whatever, presumably because of that. In short, I'm pretty sure FTB knows everything about you and your CA taxes :) Also based on reading the publications myself (disclaimer: IANAL), I'm pretty sure unless you actually work/live in CA, or have delayed income based in CA, you are not generally supposed to pay CA taxes.

128 points by dmitrygr 5y ago

Although state income/capital tax is not deductible right now, after the $10,000 cap, you can still lower your AGI to zero or negative from the usual concoctions, which leaves nothing to tax, that way.

asdfasgasdgasdg 5y ago
There are no usual concoctions that will get a normal high-income wage-earner to zero. If you have an unusual situation or are retired that's a separate issue, but even then it's not as easy as people make it sound.
- vmception 5y ago
  Right, no use in talking about it, just let ProPublica “leak” tax techniques two decades late, per usual Wage earners do have the worst circumstance. The slowest and highest taxed way of getting money and it has a general ceiling. And they don’t have access to half of their earned capital that year to even attempt doing anything with it, Yuck. There is still a lot they can do.
  - deleted 5y ago
    [deleted]

pxeboot 5y ago

Since California has a reputation for it's high taxes on almost everything, I was surprised to learn their State budget is pretty average on a per capita basis [1]. [1] https://en.wikipedia.org/wiki/List_of_U.S._state_budgets https://en.wikipedia.org/wiki/List_of_U.S._state_budgets

whoisburbansky 5y ago
Could it be that CA receives less in federal aid per capita than the average state
- akhosravian 5y ago
  I think its more likely that the state's rules on increasing property taxes hamstrung its ability to raise revenue through the increasing property values in the state. Instead they make up the difference through other means of taxation.
  - bingohbangoh 5y ago
    Aren’t property taxes only paid to local municipalities? Pretty sure it’s that way in NJ at any rate
    - asdff 5y ago
      It's complicated in CA. Yes, they stay local in the county and are meant to fund education. The caveat is that due to proposition 13 property taxes no longer are able to fund education completely and the state has to step in to cover the gap, so property taxes have a large impact on the state budget. https://lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx https://lao.ca.gov/reports/2012/tax/property-tax-primer-1129...
  - toomuchtodo 5y ago
    Those who work are subsidizing those who own property.
    - xibalba 5y ago
      Those are not mutually exclusive sets. In fact, one is pretty close to a subset of the the other.
      - 5y ago

kyleee 5y ago

I love the list of recommendations, including: > Notify friends and family of permanent move out of California Make sure to send it certified mail, return receipt requested and save the records!

asdfasgasdgasdg 5y ago

I know that we have a tendency on this site to oversimplify things, but if you read the list of things you have to do to demonstrate residency elsewhere, it really is quite simple. If you actually live elsewhere like a normal person and are only back in California occasionally for vacation, you're at little risk of being audited and even less risk of being assessed taxes. The problem comes in when you try to have your cake and eat it. For example, you might run into trouble if you're trying to work and live in Cali five months and thirty days a year without paying California taxes. I know for me, as a relatively high income individual, the FTB did not even make a peep about our residency change. They didn't even ask for any documentation, to the best of my recollection.

kenhwang 5y ago
The big one is if you still work for a company that only has Californian offices that requires you to visit for work. That's the leash a lot of tech workers will find hard to break.
- asdfasgasdgasdg 5y ago
  Yes, being a frequent aerocommuter in an income tax state like CA is of limited use, when it comes to avoiding taxes. To me, this is a feature, not a bug. I don't want people causing massive pollution by flying back and forth to the office each week to avoid taxes. It's definitely not something that we should encourage.
  - carlivar 5y ago
    Whew definitely don't look at Elon Musk's private jet usage in that case.
cascom 5y ago
Count yourself lucky. I’d say it was California that was behaving that way…unless you take the position that you can be a resident in multiple states…in which case you should be able to vote in multiple states, claim unemployment in multiple states, have driver’s licenses in both states etc.

ineedasername 5y ago

Basically you can't claim to have left California if you (even inadvertently) still have significant legal ties to the state. And probably not at all if you spend 9 months a year there. If you move, deliberately cut all official ties like license, voting registration, storage units, etc. All of which makes sense: if you're moving these are things you should do anyway. It's likely that California is probably much more strict in chasing down these details because its high tax rate makes it attractive to have a legal residence in one state while mostly still operating out of CA.

culturestate 5y ago
The California FTB is the most exhausting tax authority I've ever dealt with. I have a virtual mailbox in LA and made what I now know to be a tragic error in using it as my address for one single 1099 contract around seven years ago. They sent me a tax demand notice, and despite repeatedly proving to them that not only was I not a California resident at the time but that I wasn't even resident in the United States at the time, they're still after me for their ~$50. I refuse to pay it on principle, so I've just resigned myself to the knowledge that I'll get a letter from them every spring until either I die or California secedes.
- dragonwriter 5y ago
  > I refuse to pay it on principle, so I've just resigned myself to the knowledge that I'll get a letter from them every spring until I die or California secedes. Why would California seceding have any effect?
  - crocodiletears 5y ago
    A crater can't collect taxes, maybe?
- thehappypm 5y ago
  You should listen to Mike Birbiglia's "My Girlfriend's Boyfriend." In it he tells a story about how he's T-boned by a drunk driver, but due to paperwork issues, he's on the hook for the damages to his rental car. It becomes an obsession for him, until his girlfriend makes him realize that being right is not as important as being happy, and he just lets it go and pays to make it go away and stop sucking his happiness out of his life.

swiley 5y ago

I wish we could just give California to Canada, maybe trade for something cool like the Yukon.

professoretc 5y ago
So trade away something that produces 70% of the nation's food, for something that produces none?
tomc1985 5y ago
I'm not sure "biting the hand that feeds you" gets more literal than this. Not only do we feed you, but we're one of the few states that gives more than we take. Have fun rotting in mediocrity without us.
- refurb 5y ago
  Once the water runs out you won’t be feeding anyone.
  - tomc1985 5y ago
    Desal's some pretty great tech
    - swiley 5y ago
      Just keep pumping that Co2 into the air for the rest of us why don't you
dennis_jeeves 5y ago
Any takers for Quebec?
AtlasBarfed 5y ago
https://slate.com/news-and-politics/2001/03/let-s-ditch-dixie.html https://slate.com/news-and-politics/2001/03/let-s-ditch-dixi... Let the South Secede!

eplanit 5y ago

I have several neighbors who have fled California (smart bastards), and they knew to make it a very clean break. First get an apartment in another state; move bank accounts to new "state" bank in new state; get a new driver's license in that state; ensure employment address and all "official" addresses are changed, along with any and all other correspondence that's possible; sell house and/or car -- leave, leave, leave. Any reason they can find to make any association to the state, they will; and, like TFA says, the burden is on YOU to prove you DON'T live here.

pc86 5y ago
These are all things you should be doing anyway if you're moving so it's not a particularly high bar to meet. And as with most things, the burden is on you to the extent that you want to actually prove them wrong. If you don't find yourself going back to California and you're willing to get a nasty letter from them every now and then, it's really a non-issue even if they firmly believe you are/were a California resident. They can't lien property outside of the state. If they put something on your credit report, you can dispute it with the reporting agency (who are much more likely to be reasonable than some FTB bureaucrat). Yes it can be a pain in the ass but I don't think it's nearly as big of a hurdle as TFA is making it out to be.
- cft 5y ago
  I went to MIT long time ago and have an MIT credit union account. Am I a Massachusetts tax resident then? Or should I shut it down.
  - silverpepsi 5y ago
    A long time ago sounds like you're well past the point of getting audited by the state of Massachusetts. So it might have made sense to be safe two or three years after the departure, it's unlikely they pop up on you now with an audit
- mixmastamyk 5y ago
  If your bank is under the influence of CA it can still be a problem. Something to keep in mind.

cascom 5y ago

New York is similar, a naked cash grabs, to support unsustainable and irresponsible fiscal policies.

seattle_spring 5y ago
Oregon as well.

jandrewrogers 5y ago

It is not just moving out of State. California also requires former residents to pay taxes if they move to another country, even if you live overseas for the entire year. Before moving to another country, many people transfer their residency to a State that places no obligations on people that aren’t actually in the country.

dheera 5y ago
How do you transfer residency? Do you actually have to live there, or can you rent an AirBNB in Puerto Rico for a month?
- bingohbangoh 5y ago
  It’s typically 183 days. https://blog.monaeo.com/the-183-day-rule-5-things-to-know-when-establishing-state-residency-and-fighting-audits https://blog.monaeo.com/the-183-day-rule-5-things-to-know-wh... https://www.investopedia.com/terms/1/183-day-rule.asp https://www.investopedia.com/terms/1/183-day-rule.asp
- jandrewrogers 5y ago
  Some States have residency programs specifically targeted at nomads and expats that do not have a fixed address in the country. You don’t have to live there, you just need to show up in person to do all of the usual paperwork to establish your citizenship in that State. South Dakota is famous for this but a few other States are also popular. From the State’s perspective they are generating a bit of revenue from someone who otherwise consumes no resources, so it is a good deal for both parties.
  - infinite8s 5y ago
    Can you do this after you've moved to the other country (ie just take a few days trip to ND and move your residence from CA to ND)?
- OminousWeapons 5y ago
  You have to fulfill the residency requirements for state X while also not looking like you live in state Y. Like another poster said, you can go to South Dakota for literally a day or two and fulfill their residency requirements, but that is not likely to be enough for tax purposes. You should be employed by a company registered in that state; you should have a physical mailing address in that state (e.g. a PMB); you should file a USPS change of address form listing your new mailing address as your official address and change your registered address with service providers like banks and telecom; you should avoid spending more than 182 days per year in any other state as another poster mentioned; etc.

rahimnathwani 5y ago

Imagine you live in California and get a job that pays you $X salary plus equity vesting at 1000 shares per year. After a year, you move out of California and continue at the same job. In year 1, you'll pay California taxes on the 1000 shares that vested at the end of that year. What about years 2, 3 and 4? You'd guess that you wouldn't pay any California taxes on those vest events. Because you 'earnt' those shares after you left CA. Not so fast. Because you were living in CA when those 4000 shares were granted (on a 4 year vesting schedule), you'll pay taxes on these proportions of each vesting event: Year 1: 100% (lived in CA since grant to vest date) Year 2: 50% (lived in CA for half the time between grant and vest) Year 3: 33% Year 4: 25% So, even though you lived in CA for only 25% of the time, you pay CA tax on over 50% of your shares.

refurb 5y ago
This is basically my understanding. Any income that could be connected to California will be subject to taxes. Or at least the FTB will try. I know some folks who left the state and got a “taxes owed” notice from FTB. They replied with “i haven’t set foot in CA for 3 years, I don’t owe anything” and the FTB dropped it. It’s basically the same as NY and NJ which does it’s best to get its pound of flesh.
- lotsofpulp 5y ago
  NY is currently forcing employers to withhold income tax for people in NJ who have not been in NY in the last 18 months. I know quite a few companies who told their employees they will not stop withholding NY taxes from their income, and the issue is currently making its way through the courts. Edit: I missed this update, but apparently the SC told NH they cannot sue MA, so as far as I now, NY and MA have been cleared to continue collecting income tax from people not working in their states. https://www.cbsnews.com/news/supreme-court-wont-allow-new-hampshire-to-sue-massachusetts-over-income-tax-fight/ https://www.cbsnews.com/news/supreme-court-wont-allow-new-ha...
paxys 5y ago
Got a source for that? I can say with confidence that I personally know dozens of people who have moved out of state with granted but unvested RSUs from their companies and exactly 0 have paid any taxes to California for them.

deleted 5y ago

[deleted]

paxys 5y ago

So to escape the evil tax board after moving out of California you have to...do normal stuff that you are legally required or otherwise expected to do as a resident of a new state/city — like switching your drivers license, registering your cars, registering to vote, making your address change official, not spending >9 months of the year "visiting" California. Yes some well-intentioned people unfortunately get caught in this mess at times, but a far greater number are those who worked for a SV startup for years and conveniently moved to a no-tax state a month before IPO when all their stock became "real".

rahimnathwani 5y ago
I moved away from the UK over 10 years ago. I haven't: * cancelled my UK driving licence * cancelled my library card * changed the address on all bank accounts * cancelled my mobile phone contract ...
naturalauction 5y ago
I moved from California overseas. I haven’t gotten rid of my state id as I would like an American one to use when I’m in the US. I haven’t switched my voter registration (other than to say I’m overseas) as I have the legal right to vote at my last US address. I haven’t switched my official address registration (not sure what that is, presume you mean via usps) as it is a pain internationally and someone living at my old address can still send me any mail (lots of services won’t even take a non-us address). I don’t spend much time in California (less than a month so far in 2021) but I still have some income there. I don’t think my situation is unique, I just worry that one day the franchise tax board will attempt to collect taxes which they don’t deserve (I live in a country with a higher tax rate than California, I don’t think I’m trying to avoid any taxes).
- matttproud 5y ago
  I was in a similar boat a decade ago. I read the FTB documentation (FTB 1031 Sect. E-L) carefully and just accepted it would be subjective criteria test in court if it ever came down to it. I started keeping immaculate records (motivated by the IRS' substantial presence test or bona fide residence test depending on the year and where the family was in terms of which country it was in — e.g., moving to another). The main points that were relevant — memory serves — were a permanent work contract in the new country and having dissolved housing contracts and similar in CA. My advice: if going abroad, aim to promote your residency status in the new country to "permanent residency" (cf. Green Card, Niederlassungserlaubnis, Niederlassungsbewilligung) over just being permitted either temporary or long-term (cf. Aufenthaltserlaubnis, Kurzaufenthaltsbewilligung). It takes some work to earn permanent residency over the others (e.g., being in good standing, language mastery, and ability to substantively demonstrate financial independence). The idea of earning permanent residency (in a place where it's difficult to earn it) and throwing it away to return to CA suddenly would probably appear preposterous in court in terms of FTB arguing that you're just away from CA temporarily. I kept a US driver license out of convenience in CA. Never was a problem, though I transitioned it to another state where I had family ties and a mailing address hear later. I kept my CA bank account out of practicality. It was the only bank I had dealt with out of about six in rapid succession that was supportive and friendly with my living abroad (e.g., power of attorney, wire transfers without being in-person). Voter registration in CA is fine per Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA). You are entitled your vote; what will differ is whether the state grants you purely federal or also local voting rights. You get federal at a minimum. UOCAVA is a bit hand-wavy with the criteria, so I did transfer my voter registration to the other state where I had the license. For the one year I was half-in California while also being abroad, I still filed taxes accordingly for that year for CA. IIRC, I might have even filed 0 in a CA FTB form for the next year. So: in short, multiple years with "weak" bureaucratic carryover ties in CA without issue, but ultimately transferred all matters aside from bank account to a state with deeper ties (even if living abroad). Never an issue. The real monster, which dates back to the US Civil War, is the need to pay and file taxes when domiciled abroad. You can then add FATCA on top of that as a cherry. The CA FTB is a dream compared to the IRS here. I’ve basically accepted that this situation won’t improve in my lifetime. Maybe my children’s.

deleted 5y ago

[deleted]

justanother3 5y ago

"There, a nonresident sole proprietor performed all of his services outside of California. However, some of his customers were located in California. Is that enough for the poor guy to attract California tax liability? The California taxing authorities said he was operating a "unitary" business. Therefore, his tiny business was subject to California's apportionment rules." "The California Franchise Tax Board matched income records showing that he collected $40,000 of income from California companies. Not surprisingly, Bindley did not file a California tax return. That meant California’s statute of limitations would never start to run." So should out-of-state freelancers avoid taking on any CA clients?

bingohbangoh 5y ago
I know somebody in NYC who does exactly this. He refuses to take on any clients in California. This isn’t because NY is a picnic but because it limits his headache to one state.
professoretc 5y ago
It sounds like the nature of his business was such that CA thought he didn't have "clients" (plural) but rather a single client spread out over multiple states.

BurningFrog 5y ago

What if a hypothetical person moves to Reno, for real, buying a house etc, and continue to work remotely for their small SF based employer? Does it help that the employer has offices in 2 other states?

refurb 5y ago
If your employer (W2) is in CA you pay CA income taxes.
- niij 5y ago
  Taxes are based on where the work is performed, not where your employer is located in all US states in aware of. So remote work solely out of your home in Reno, NV for a California company would have no state income taxes (since Nevada doesn't have state income tax).
  - lotsofpulp 5y ago
    There is a slight caveat currently if you were previously performing your work in a place that did tax: https://www.cbsnews.com/news/supreme-court-wont-allow-new-hampshire-to-sue-massachusetts-over-income-tax-fight/ https://www.cbsnews.com/news/supreme-court-wont-allow-new-ha...

MR4D 5y ago

> “19. Obtain new state phone numbers.” HA! I had to laugh when I saw this. I’d love to see this argued in tax court in the modern day. It would be hysterical.

mywittyname 5y ago
That's such a massive burden anymore, since so many services tie 2FA to phone numbers for some dumbass reason.

synergy20 5y ago

For years I have rejected _all_ contract and permanent jobs from CA for two reasons: 1. I don't enjoy filing state income tax(I'm a Texan) at all. 2. I have to get 13% higher pay comparing to what I earn in TX which CA-recruiters did not like it much at times. The 13% is to cover CA's state income tax.

deleted 5y ago
[deleted]
Rebelgecko 5y ago
I don't know your situation so maybe this actually is an issue for you, but I feel like it's worth pointing out that the 13% tax bracket is only on income beyond $1 million/year
- lotsofpulp 5y ago
  Amazing how many people do not understand marginal income taxes.
chris11 5y ago
I don't do a ton of contract and I don't like CA taxes. But this seems slightly antagonistic. Hiring a CPA will make taxes easier, both of these can mainly be solved with more money. Why are recruiters negotiating with you about whether or not 13% is a far increase for being in CA? To me it seems like the high end for comp in Silicon Valley is much higher than the high end for comp in Texas. And 10-20% salary adjustment for an internal move between a MCOL city and Silicon Valley seems normal. I don't know your situation, but a 15% bump for working in CA sounds cheap in general.
kenneth 5y ago
You don't have to pay taxes in CA if you don't live there, even if a client is in CA. Unless you're talking about doing on-site jobs.
- commandlinefan 5y ago

gumby 5y ago

What this crazy blog post ignores is that if you move away you lose all the benefits of living in California. Sure, you want to move and do so (or don’t want to but have to for some reason). You’re fine. This whole post is about wanting to get the benefits of being in california (9 months a year wtf) but not pay for it. And in the end, california taxes overall…are pretty average.

djrogers 5y ago
> And in the end, california taxes overall…are pretty average. Err, no - no they aren’t. By most accounts, it’s the highest or in the top 2-3 in the nation, and not by a little. California has the highest income tax, the highest capital gains tax, and the highest state sales tax. The only common tax rate in CA that’s even close to average is property tax. [1] https://worldpopulationreview.com/state-rankings/highest-taxed-states https://worldpopulationreview.com/state-rankings/highest-tax...
- lotsofpulp 5y ago
  It depends what income band you are in: https://itep.org/whopays-map/ https://itep.org/whopays-map/ It is not useful to consider top tax rates for every state unless you are in the top tax rate income bands for every state.
  - willcipriano 5y ago
    A tax that starts at 90% for low income people and ends up at 2000% for high net worth individuals would be the one of the most progressive tax systems imaginable and yet would be completely unaffordable. The average percentage of earnings paid to taxes and governmental fees would be a better judge of this but that I've never been able to find data like that.
    - gumby 5y ago
      A reasonable proxy is state expenditure per capita. In the case of california, the state happens to collect a disproportionate amount from cap gains which helped in 2020 and caused a crisis in 2008. Also spending is higher per capita in the less densely settled (and predominantly Republican) portions of the state (most of it if you look at a political map) simply because the infrastructure is thinner and more critical and social services are more expensive to provide.

didibus 5y ago

Why is California taxes so high anyways? I feel they add up with the federal taxes to as high as in Canada, except that you don't get almost free education, subsidized child care, free health care, free meds, and year long parental leave.

seattle_spring 5y ago
They're so high because property tax is grossly unfair there. There are people with $10m homes paying taxes as if valued closer to $100k.
- lotsofpulp 5y ago
  It is funny, CA actually has very progressive taxes…except prop 13 creating this giant loophole for land wealth where the older landowners are grandfathered into a highly regressive property tax. https://itep.org/whopays-map/ https://itep.org/whopays-map/
nradov 5y ago
Depending on how you count, California has about the 10th highest total tax burden among US states. But in terms of educational achievement and government services we're certainly not getting our money worth. The state government is now largely controlled by public employee unions who treat it as a cash cow.
cmrdporcupine 5y ago
No free meds in Canada. Well, not for most people. And no dental care coverage either. Just doctor/hospital care. Education isn't almost free. Annual tuition is $7k-$8k CAD ($6.5kish USD) a year. And subsidized child care is... dicey. Depends on province, etc. and unlikely to find availability. As for parental leave, could you live on $595 CAD ($472 USD) a week? That's the maximum... Not ideal in the Toronto area where the average for a 1 bedroom apartment is around $2000 CAD a month. It certainly helps a lot when you have a working spouse, but it's not enough to raise a child on your own. It's not a worker's paradise up here. It's better than it could be though.

BooneJS 5y ago

I left California 2 years ago, and I still have 2 years of taxes to pay on RSUs granted while a resident.

WalterBright 5y ago

> You can leave for Nevada, Texas, Washington or other no-tax states, Not anymore. Washington now has a 7% capital gains tax.

01100011 5y ago
WA taxes capital gains profits which exceed $250k annually. The rate is also less than you'd likely pay in CA(max 13%?). Not great, but better than CA. The thing that gets me about WA are the insane liquor taxes(and higher base prices as well for some reason). OR isn't too far away though, and they seem to have reasonable prices despite the state liquor monopoly.
- rdtwo 5y ago
  Starting next year yes
lotsofpulp 5y ago
WA now has a 1% income tax for W2 income in the form of 0.4% for family leave/sick leave/parental leave and 0.6% for long term care insurance (which is effectively a marginal income tax considering the state LTC insurance benefits are pathetic). They also snuck in a way for current residents to get out of paying the 0.6% LTC tax if you were heads up enough about already getting LTC insurance earlier this year, but anyone moving here after Oct 2021 is screwed.
- rdtwo 5y ago
  Yeah LTC is a scam. I wish the courts would strike it down

softveda 5y ago

It just shows what a mess US taxation is. I am in Australia and we have a single federal income tax and GST and I am glad for that.

vburg 5y ago

You can check-out any time you like, but you can never leave.

shell0x 5y ago

As a non-American who lived in 6 countries and dealed with different tax offices in Asia/Pacific/Europe, the system sounds absolutely ridicilous to me.

kellengreen 5y ago
As an American living in London, you'd be correct, it's simply ridicilous.
- shell0x 5y ago
  It’s almost as if your government wants to punish you for living abroad. On the plus side, America accepts dual citizenship and Germany(where I’m from) accepts not, unless I apply for a special permit to retain German citizenship before acquiring another citizenship.

wholien 5y ago

Anyone know how 83(b) elections (aka "early exercise") works with Californian tax? After the 83(b) election, if you fully vest all the early exercised shares in California, then move elsewhere for a year or more before selling, will California still tax the gains from that sale? On the one hand, I'm vesting the exercised shares whilst in CA. On the other hand, I've early exercised, so there is no realized gains until I've sold. So if I leave CA, renounce all ties to CA as the article says, then sell, will CA come after me? Is this analogous to buying a share of Google whilst a CA resident, then becoming a resident somewhere else and then selling that share of Google there? CA doesn't tax that... right?

junar 5y ago
The answer is in FTB Pub 1004. It depends on whether you sell NSOs, ISOs in a qualifying disposition, or ISOs in a disqualifying disposition. https://www.ftb.ca.gov/forms/misc/1004.html https://www.ftb.ca.gov/forms/misc/1004.html

AdrianB1 5y ago

Treat your citizens like cattle, not like pets. I cannot remember where I read this, but it kind of makes sense.

LinuxBender 5y ago

My tax attorney gave me a list similar to that, but it only had 19 items. I think the items I didn't see on the other list were birthday cards, clubs and social groups and heirlooms. They've had some clients get grief from the FTB but a phone call can sort it out. My attorney of course offered to do this for me. This is my last year in California so I guess I will find out how hard this is.

jjav 5y ago

CA is particularly bad but I've seen this from smaller states as well. I went to grad-school in PA (CMU). After graduating and moving out of PA, a couple years later PA demanded taxes on income I only earned after leaving the state. It amounted to only like $40 and I was afraid it'd cost way more to fight so I just paid it, even though it was a completly fabricated tax bill. Today I'd fight it just on principle but I was too poor then and couldn't afford to talk to a CPA or lawyer.

sershe 5y ago

I had an interesting experience with FTB... I returned to WA without changing jobs, after working in CA and getting some ISOs. The way it works is that you separate the income from the ISOs that don't meet holding reqs proportionally between certain dates. I.e. you pay CA taxes on the fraction of "wage" income earned in CA vs another state; and no CA taxes on the other portion, attributable to that other state. However, there's no form for that; so, for a few years I'd do the math in Excel, and then send FTB a form that looks like "here's my total income, and I pinkie swear this (much smaller) random-looking number is my CA income". What's interesting is sometimes I was too lazy to do proper math for some small sale transactions that were few days apart, so I'd round it in favor of FTB. And every year FTB would charge me as expected, and then send me a check for $20, $50 or whatever, presumably because of that. In short, I'm pretty sure FTB knows everything about you and your CA taxes :) Also based on reading the publications myself (disclaimer: IANAL), I'm pretty sure unless you actually work/live in CA, or have delayed income based in CA, you are not generally supposed to pay CA taxes.