Residency - Income Tax (Sacramento: live in, moving to, money)

[intothelight]

I just chatted with the FTB a couple times. I explained to them my situation. That I am a resident of Washington State. That I was planning on moving to California for 3-6 months - and would be returning to Washington thereafter. That I do NOT have income from California-based sources.

One said that because my income from other sources was W2 from another state, I'd have to file with them, even as a non-resident. This is pretty obviously false from what I see on their website.

The other person said I wouldn't have to pay California taxes or file a return with them.

Sounds like I'm set? Anyone have experience with this?

https://www.ftb.ca.gov/individuals/f...sidency_status

Nonresidents of California - Taxed only on income from California sources.

The key part seems to be whether they think you're a resident. I'm not maintaining a "domicile" in Washington - but that's because I rent. I am returning there and will be in California for less than a year.

[wburg]

Originally Posted by New2Tn

To wburg, thank you for spreading the word about the Great State of California. Apparently a lot of people agree with you. The official State of California population estimates show explosive growth. http://tinyurl.com/o3yb3mo Be sure to look at the official charts and graphs provided by the State. As you read those stats, ask yourself how many of the new residents are going to be tax payers, and how many will be tax takers. I'm not saying I have the answer, I'm saying it's a scary question to ask when you're talking about that much growth.

Actually, growth in California's population is nowhere near as explosive as it was in the mid-20th century. Nearly one American in Eight is a Californian. It was easy to have lower taxes when our population was expanding--now it is stablizing, and that means we can't count on ridiculous growth to sustain our infrastructure. That means paying for it. And yes, there are plenty of tax takers out there, like the corporations that use obscure techniques to off-shore their money and avoid paying taxes on it. I agree it isn't fair, but perhaps we can do something about that someday.

Meanwhile I continue to be amazed at the lack of traffic on 4 lane highways in southern middle Tennesse. Let's see, no traffic, no pot holes, no smog, no trash on the highways, mowed medians on the Interstate, and all of that with a State budget surplus. Oh and the next time you walk into a California DMV think about this. https://news.tn.gov/node/11068

California gets back about 78 cents on the dollar from the federal government for every dollar we send to DC--the other 22 cents goes to other states, to pay for things like their highway infrastructure. Tennessee gets back about $1.27 in federal money for every $1 they send to DC. So, if you think about it, California taxpayers are paying for highways in Tennessee, which, if there is that little traffic, you probably don't even need. You're welcome.

[ryuns]

I think we should keep all the tax whining on the California forum. The Sac forum is usually so bright and cheery.

[intothelight]

Originally Posted by ryuns

I think we should keep all the tax whining on the California forum. The Sac forum is usually so bright and cheery.

OK- yes, agreed. I hate to argue. And it doesn't do any good to try to convince someone else they're wrong. It never works. My only outstanding question is regarding whether or not my discussion with the FTB (posted on last page of thread) means what I think it does - or what I was told it means.

[ryuns]

Originally Posted by mdb1986

OK- yes, agreed. I hate to argue. And it doesn't do any good to try to convince someone else they're wrong. It never works. My only outstanding question is regarding whether or not my discussion with the FTB (posted on last page of thread) means what I think it does - or what I was told it means.

You started it. Whether in real life or on the interwebs, I think Californians just hear a lot of complaints about taxes and what communists we are. For some reason, starting words with the letter "k" is really popular and making up words like kommiefornia is a cool thing to do. Haha.

Yeah, taxes are higher than a lot of other places and regulations are strict, but the conversation about what those laws provide for and protect, and whether that's worth what we pay and give up, is a lot more nuanced than, say, painting Tennessee as some smooth-road, traffic-free utopia.

To your questions, did you see this document?
https://www.ftb.ca.gov/forms/2012/12_1031.pdf
Page 4 has information about what constitutes part-year residency. I'm sure that's the case with you, but it would help to check.

[NickB1967]

Originally Posted by wburg

Actually, no, it's headed the other direction. Today's top federal tax rate is less than 40%. Through most of the 1940s and 1950s, it was 91%. So celebrate--taxes are going down!

My definition of "freeloader" is someone who wants to work in California, taking advantage of our $2 trillion economy, driving on our roads and otherwise clogging up our infrastructure, but doesn't want to pay 8-9% of the salary they earn in our state to pay for their own upkeep. If you want to do business in California, follow the rules.

Washington doesn't have income tax--but you do have business taxes, excise taxes, and higher property taxes, and other taxes to keep the state afloat. So it's not as though Washington's government comes without a price tag, and they, like California, pay more to the feds than they receive, subsidizing poorer states--we just charge for different things.

Oh get real. It is still too high, relative to so much of the rest of the nation and world. (Sorry, ryuns, but this is a sore point).

It is amusing to see pipedreamers on the Left, who chide people on the right for “wanting to go back to the 1950′s” (culturally), instead want to go back to the 1950′s economically, when THAT world clearly no longer exists.

Let’s see now, in the 1950′s, the Cold War was a raging, there were no investment opportunities in Maoist China or Soviet Russia, the “emerging markets” were post-colonial battlefields, and Europe and Japan were rebuilding from the rubble. High corporate tax rates in the USA were feasible because there wasn’t anywhere else for them to go…..

Today, capital can move with the click of a mouse, so it really isn’t a surprise that Warran Buffett’s investments are taxed at a lower marginal rate than his secretary’s wages.

Moreover, many things were deductible back then that are no longer today, from “Meals And Entertainment” expenses at 100%, to Credit Card Interest, to Medical Expenses, which were not subject to an Adjusted Gross Income “floor” of 7.5%. So the top marginal rate of 90 odd percent never actually happened to anyone.

And by the 1960's, no one ever paid 50-70% of their income in taxes either. When those rates were in effect they were offset by a wide variety of tax deductions that don’t exist now. For instance, we make a big deal out of the home mortgage interest deduction, but back then all interest was deductable — mortgage, auto loan, credit card! Detroit was making money hand over fist manufacturing shoddy cars with expensive union labor because a new car was a valuable tax shelter.

When you take out a loan, the initial payments are nearly 100% interest. So if you had a lot of money and wanted to pay less taxes, you would simply buy a new car every year and trade in the old one. Then your car payments became essentially fully tax deductable. The tax code was swimming with other tax deductions and there was a big industry in exercising them.

In other words, no one paid at a 70% tax rate. The 70% tax rate was what you paid on the small amount of money that you were unable to shelter. Implementing the 1960s tax rates without the corresponding tax shelters would be a disaster for the economy. The high marginal tax rates had a side effect of encouraging economic activity that avoided the tax rates. Without the tax shelters, the high tax rates would hoover money out of the economy.


Moreover, Real estate was then a bigger tax dodge than it is now. Depreciation – paper losses — could be deducted at a double declining balance rate (rather than todays more modest MACRS formula) from ordinary income until none was left. It was this reality that originally gave rise to the AMT, now a pain in so many backsides. Highly leveraged deals often produced tax losses to investments in ratios like ten to one.

Anyone who tries to tell you the tax rates of the ’50s- ’70′s can be directly compared to today’s rates either doesn’t really know what he is talking about or is trying to mislead you.

[capoeira]

Originally Posted by mdb1986

I just chatted with the FTB a couple times. I explained to them my situation. That I am a resident of Washington State. That I was planning on visiting California for 3-6 months - and would be returning to Washington thereafter. That I do NOT have income from California-based sources.

This sounds like an extended vacation. Suppose a retired person from Minnesota with a lot of dividend income takes a 3 week or 3 month winter vacation in California. Does he/she have to pay CA income tax? Of course not.

[intothelight]

Originally Posted by ryuns

You started it. Whether in real life or on the interwebs, I think Californians just hear a lot of complaints about taxes and what communists we are. For some reason, starting words with the letter "k" is really popular and making up words like kommiefornia is a cool thing to do. Haha.

Yeah, taxes are higher than a lot of other places and regulations are strict, but the conversation about what those laws provide for and protect, and whether that's worth what we pay and give up, is a lot more nuanced than, say, painting Tennessee as some smooth-road, traffic-free utopia.

To your questions, did you see this document?
https://www.ftb.ca.gov/forms/2012/12_1031.pdf
Page 4 has information about what constitutes part-year residency. I'm sure that's the case with you, but it would help to check.

I spoke with FTB again and got all my questions answered, and the answer they gave me documented, so I'm good, thanks. I didn't mean to "start" anything. I'm not going to change your mind, so there is no point to argue. I'm coming to realize that even when it feels like I'm right, I'm not always right - though what's interesting is no matter how many times I find out I'm wrong, I am still always a bit surprised when it happens. So, I respect your opinion 100%. Let's hope the best thing happens going down the road - whatever it is.

[wburg]

Okay then, your original post made it sound like you would be working for a California employer or otherwise making money in California while you were here. Enjoy your vacation!

[cb73]

True example: When the whatever team comes to Sacramento to play the Kings--because they are physically in California when the money is earned, even though they work for out-of-state-team, they have to pay California taxes on the amount earned for that game.

I know someone who has a basketball player for a customer, and she has to file state income tax for him in 10 or 20 states every year. She says it's a mess, but very profitable for her.

I see that you got conflicting answers from FTB and are going with the one you like best. Hopefully that will work out for you.