The Golden State: the land of the sun, innovations, and the most beautiful nature. However, there is one important financial side to this desirable way of life, which is its taxation system. It is important to know the California residency rules since the state is notoriously aggressive in insisting on you as a taxpayer.

Be it the process of moving in, moving out, or the multi-state living, by understanding the basics, you will avoid new headaches and high taxes in the future. Look for a professional tax experts (like a criminal tax attorney) who can help you tackle difficult tax matters.

Understanding the Core Concept of Domicile vs Statutory Resident

The two key methods through which you can be a resident of California when it comes to taxation include:

a)     Domicile

This is where you have made your permanent residence; that is, when you are away, you plan to come back. You need to have only one domicile at a time. In the case of California being your home, then you are subject to taxation on all your earnings, irrespective of your source of earnings.

b)     Statutory Resident

California can tax you as a resident even in the case of a new domicile outside of California, provided that you satisfy both of the following conditions:

What Are the Challenges You Might Have to Face?

When you attempt to leave, a great difficulty is posed. The Franchise Tax Board (FTB) of California is widely known to conduct so-called residency audits in order to question those who claim to have left.

The most difficult one is the demonstration of a change of domicile. The FTB checks a closest connections test, which investigates all the facets of your life to determine whether the links that you have with California are stronger than those with your new state.

Practical Example

Consider a case where Alex, a technical employee, has relocated to Texas to take up a new position. He acquires a Texas driving license and leases an apartment. Nevertheless, he does not sell his California residence but rents it, his doctor and dentist are still in San Francisco, his spouse is still in the California home half-yearly as their child does his or her school.

The FTB will still consider California as the nearest state that Alex relates to, and they will probably claim that he is still a California resident as regards tax purposes.

Protective Approach to Handle Those Challenges

a)     An Attack Strategy

The most effective method of dealing with these difficulties is to take the initiative and make a written document of your plan to move out of California forever.

b)     Record Your Move

Have a calendar and work out the number of days in California very carefully. Spending over 183 days would automatically qualify you to be a statutory resident.

c)     Sell or Lease Your California Property on A Long-Term Lease

This is called Sever ties. By keeping it, you should be ready to demonstrate that it is an investment and not a home that you are going to go back to. Managing complex tax attorney IRS problems has become quite easy now with the help of experienced tax experts.

d)     Create Connections in Other States

Forge a new existence in your new state. Hire a new physician, dentist, and financial consultant. Become members of local clubs and religion groups. Register your vehicle there.

The process of becoming a California resident is tedious and very paperwork-intensive. The keys to paying only your fair share by learning the regulations and getting your case together in advance are to make sure that you are not paying more than you owe, and then you are able to enjoy the Golden State on your terms.