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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 en

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.
  - dheera 5y ago
    > USPS change of address form listing your new mailing address Is this a requirement? I don't fill out COA forms anymore because the idiotic assholes at USPS hand out your new address to stalkers, harrassers, spammers that knew your old address
    - OminousWeapons 5y ago
      I'm not sure if its an absolute requirement, but remember you are trying to make it appear as if you have moved to that state and made it your state of residence. Not filing a change of address form looks strange without any other data in that context. If you want to avoid people knowing your address, I would recommend using a "private mailbox" (PMB) service and making that your official address. This gives you an address that is recognized as a physical address by most services and USPS but basically functions as a mail proxy: they will receive your packages / letters and forward them to another address you provide them. If you are concerned about stalkers or other hostile people, you could have the PMB forward mail and packages to a P.O. Box or commercial mail receiving agency (UPS Store et al) which is not where you live. Escapees and America's Mailbox are examples of PMBs with receiving facilities in South Dakota.
jhgb 5y ago
> California also requires former residents to pay taxes if they move to another country But so does the federal government, doesn't it?
- irjustin 5y ago
  Yes, but it's not really the same. I benefit from being a U.S. citizen, namely passport, so there's at least some justification. Otherwise I'd be stateless, which is a nightmare classification to be. I garner no benefits not being in the state vs another one. I suppose if I care local elections that's... it?
- naturalauction 5y ago
  But California doesn’t have a tax treaty with other jurisdictions and doesn’t recognize the foreign earned income exclusion (first 100k is tax free federally). This means that even if you don’t owe anything federally (as you earned less than 100k and/or worked in a country with a tax treaty and can offset all your federal tax liabilities) you will still owe the state of California money.
  - xyzzy21 5y ago
    BTW the Federal exception is impossibly narrow to ever meet the first year you are overseas: a date in February starting overseas is required (it's like 10.5 months WITHIN the calendar tax year - e.g. if you move overseas in March of the year, you SOL on the exemption). Pretty much unlikely you'll qualify the first year. But after should be easy enough.
    - junar 5y ago
      That's not how the foreign earned income exclusion works. For example, if you meet the 330-day physical presence test using the 12 months between April 1, 2020 and March 31, 2021, you can qualify for a prorated amount of the FEIE. https://www.irs.gov/publications/p54#en_US_2020_publink100047508 https://www.irs.gov/publications/p54#en_US_2020_publink10004... https://www.irs.gov/publications/p54#idm140194641073648 https://www.irs.gov/publications/p54#idm140194641073648
naturalauction 5y ago
My understanding is that this is only if you intend to move back to the state of California. I don’t know how you go about proving that that isn’t the case if they ask though.

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.
- dheera 5y ago
  > USPS change of address form listing your new mailing address Is this a requirement? I don't fill out COA forms anymore because the idiotic assholes at USPS hand out your new address to stalkers, harrassers, spammers that knew your old address
  - OminousWeapons 5y ago
    I'm not sure if its an absolute requirement, but remember you are trying to make it appear as if you have moved to that state and made it your state of residence. Not filing a change of address form looks strange without any other data in that context. If you want to avoid people knowing your address, I would recommend using a "private mailbox" (PMB) service and making that your official address. This gives you an address that is recognized as a physical address by most services and USPS but basically functions as a mail proxy: they will receive your packages / letters and forward them to another address you provide them. If you are concerned about stalkers or other hostile people, you could have the PMB forward mail and packages to a P.O. Box or commercial mail receiving agency (UPS Store et al) which is not where you live. Escapees and America's Mailbox are examples of PMBs with receiving facilities in South Dakota.

jhgb 5y ago

> California also requires former residents to pay taxes if they move to another country But so does the federal government, doesn't it?

irjustin 5y ago
Yes, but it's not really the same. I benefit from being a U.S. citizen, namely passport, so there's at least some justification. Otherwise I'd be stateless, which is a nightmare classification to be. I garner no benefits not being in the state vs another one. I suppose if I care local elections that's... it?
naturalauction 5y ago
But California doesn’t have a tax treaty with other jurisdictions and doesn’t recognize the foreign earned income exclusion (first 100k is tax free federally). This means that even if you don’t owe anything federally (as you earned less than 100k and/or worked in a country with a tax treaty and can offset all your federal tax liabilities) you will still owe the state of California money.
- xyzzy21 5y ago
  BTW the Federal exception is impossibly narrow to ever meet the first year you are overseas: a date in February starting overseas is required (it's like 10.5 months WITHIN the calendar tax year - e.g. if you move overseas in March of the year, you SOL on the exemption). Pretty much unlikely you'll qualify the first year. But after should be easy enough.
  - junar 5y ago
    That's not how the foreign earned income exclusion works. For example, if you meet the 330-day physical presence test using the 12 months between April 1, 2020 and March 31, 2021, you can qualify for a prorated amount of the FEIE. https://www.irs.gov/publications/p54#en_US_2020_publink100047508 https://www.irs.gov/publications/p54#en_US_2020_publink10004... https://www.irs.gov/publications/p54#idm140194641073648 https://www.irs.gov/publications/p54#idm140194641073648

naturalauction 5y ago

My understanding is that this is only if you intend to move back to the state of California. I don’t know how you go about proving that that isn’t the case if they ask though.