For a California resident that worked in a restaurant in new mexico most of 2019 when filing taxes, would that be considered first year resident for New Mexico and non-resident status for california?
There is no intent for staying after covid-19. The california resident still has california id and utility bill. California mentions residency is based on where you have the closest connection. Which is the best way of determining which state would be residency state?
Here is the official publication from the California Franchise tax board:
I am a former resident and part-year resident of New Mexico who is once again a CA resident.
Based on the facts you presented, it appears as though you had no intent to change your domicile (your one true home, the place you always intend to return to whenever you leave) from CA to NM. As such, you remain a CA resident and are required to file a CA 540 tax return and pay taxes to CA on all your income. NM will treat you as a resident if you were physically present for at least 185 days in 2019. You only count 24 hour days. If your use of "most of" means you pass the 185 day test, you are also a resident of NM and must file their resident tax return PIT-1. To avoid double taxation, NM will provide a tax credit to those domiciled in another state to apply against your NM tax bill for the taxes you pay on the same income. The credit can not exceed the amount of tax you pay to NM. You will need to complete NM Schedule PIT-B to allocate and apportion your income to New Mexico. Read the Schedule B instructions carefully, as there is federal income that is 100% taxable by NM and some federal income that is not taxable by NM. Ultimately, you get a ratio of NM to Federal income. You will compute your NM income tax based on the income on the Pit-1 Line 17 and then multiply that amount by the ratio on the Schedule B. The resultant tax is entered on the Schedule B and then posted to the applicable tax line on the PIT-1.
The credit for taxes paid to CA on Form PIT-1, line 17, for income taxed by both states.
I was wondering how do you prove if you are physically in NM or not for 185 days. I work in a restaurant as a hostess but I also go back and forth to California to order supplies for the restaurant and I carpool back home every other week. I didn't exactly keep track how many days but it feels like i am there less than half the time because i always travel and go to school in California in the summer and part of fall too but the boss was nice and still pay me a salary. My income was about $25k in new mexico total i had no california income though
Also, for the safe harbor rule I am no sure if it applies to me because after covid-19 I am back in california but don't plan on going back to new mexico. However, I am collecting unemployment in new mexico because california claims because i work in nm i need to collect it there
You keep a contemporaneous diary of your travels. It will always be up to you to prove that you are not a resident of a state if the state claims that you are a resident.
Ira Smilovitz, EA Leonia, NJ
California begs to differ. I moved from New York myself this year, so I had occasion to look into the California rules.
Basically, California taxes your California-sourced income regardless where you live, and California taxes all your income from anywhere when you live in California.
As others have commented, (1) if you go to another state for a temporary job assignment, as far as California is concerned you still lived in California and (2) California's tax on income from another state while you lived in California may be offset if the other state also taxes that income.
Where you get unemployment insurance payments should be irrelevant. The last time I checked your unemployment payments are based on the job you had 18 months before you applied.
IRA answered your question. You keep track. To reiterate: If you kept your domicile in CA, then you are a full year CA resident and prepare the CA 540 and include your worldwide income plus or minus any CA adjustments. If you pass the NM 185 day test, you are a resident of NM and File a Pit-1 and PIT-B to allocate income in order that NM not tax you on the same income that CA will tax.
If you fail the 185 day test, then you are not a resident of NM and you file a NM PIT-1 as a nonresident. When you file your CA 540 return, it is CA that will provide a tax credit (CA Schedule S) for taxes you paid NM on the same income being taxed by CA.
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