Son working abroad.

"PeterL" wrote

Can't speak for California, but I suspect you'll find it tracks closely with federal law.

See where your son qualifies on the foreign earned income....Form

2555....but Publication 54 should be required reading. After you read up on that, it may give rise to more questions - isn't that how it works?

All US sourced income would be taxed on a regular tax return (federal) and he might be considered a California resident for state tax purposes on his US income (interest, dividends, capital gains, etc.), so a state return would also need to be prepared.

I'm assuming your son was domiciled in California before he went to China. Generally, a US citizen does not establish a new domicile in a foreign country, and until a new domicile is established, the old one continues. So he is still domiciled in California.

If his absence from California is for a purpose that is not temporary or transitory, he is a nonresident despite maintaining his domicile here. (CRTC Sec 17014) So it depends on the reasons for his absence from the state. If he is working in China in a position that may last indefinitely, he is probably a nonresident; it appears that he has left minimal ties in California and has behaved as if he expects to be absent for a considerable period of time. On the other hand, if his absence is for a limited period of time, he is still a California resident for tax purposes.

There is also a safe harbor rule (CRTC Sec. 17014(d)). If he is absent from California on an employment-related contract for a period of at least 546 days, during which time he spends no more than 45 days in any taxable year in California, he is presumed to be absent for a purpose that is not temporary or transitory -- i.e., to be a nonresident for tax purposes. This rule does not apply if the taxpayer has more than $200,000 of income from intangibles, or if the absence is determined to be for tax avoidance purposes.

California does not conform to the IRC Sec 911 exclusion, so while your son may have minimal federal income tax liability, he may owe California a significant amount of tax if he is a resident. It may not be just a formality. More information would be required to know whether he will meet the 17014(d) safe harbor or if not, whether the general "facts and circumstances" test would justify treating him as a nonresident.

Katie in San Diego

Where did he live before he moved?

Seth

Here is the tricky part. He was actually domciled in Texas. On his move overseas he transfered his mail to our address in California, including changing his driver license to CA. So he was not a resident of Calif.

I think he is a nonresident then, despite having his mail sent here and having his CA driver license.

Thanks.

Texas. Although there was a short period of "in between careers" of about 6 months in CA.

Not necessarily. Check into California pub FTP 1031, Guidelines for Determining Residency Status, at

If that was more than a year ago, it doesn't matter. He was a TX resident, he moved to China. The fact that he uses a mail forwarding service (OK, a free one provided by his parents) doesn't provide residence.

If he moved from TX to CA, and then to China, it's different: he was a CA resident.

Seth

The California driver's license might raise some questions. Why was he in California for 6 months? Why did he get a California driver's license? Was the move to California in anticipation of the move to China, or did the China opportunity come up later?

Still not really enough information. However, unless he came to California with the intention of remaining here permanently or indefinitely and then later changed his mind, it appears he hasn't changed his domicile from Texas.

Katie in San Diego

| The California driver's license might raise some questions. Why was | he in California for 6 months? Why did he get a California driver's | license?

Does California still require you to get a California driver's license if you stay in the state more than 30 (or was it 60?) days regardless of reason or residency (assuming you wish to drive legally in California, of course)?

Dan Lanciani ddl@danlan.*com

Just was looking at a similar case. (lived in CA for a few years, then went abroad.)

California taxes on residency. Actual residency.

If he stopped in California during 2007 and earned income, CA will tax that. Presumablely through a part-year tax return. If he earns income in CA while as a non-resident, it is taxed with a Non-resident return. But the Feds continue to tax him as a citizen.

People are going to suggest the 2555 is the best way to go, which it is if you are single without kids or a pensioner. But there is the Foreign Tax Credit on 1116 which has advantages and sometimes you take the 1116 by itself, with the 2555 or only the 2555.

From the DMV:

If you are a visitor in California over 18 and have a valid driver license from your home state or country, you may drive in this state without getting a California driver license as long as your home state license remains valid.

If you take a job here or become a resident, you must get a California driver license within 10 days. Residency is established by voting in a California election, paying resident tuition, filing for a homeowner's property tax exemption, or any other privilege or benefit not ordinarily extended to nonresidents.

No, as Alan pointed out, a person who is in California temporarily and does not intend to reside here is not required to get a California driver's license. The FTB would ask, if he didn't intend to live in California, why did he get a California driver's license?

Here's the deal. If the OP's son moved to California with the intention of making his home here, and abandoned his Texas domicile, he established a new domicile in California, and was a resident during the six months that he lived here. As a result, he is still a resident unless he is absent for a purpose that is not temporary or transitory. If he meets the CRTC Sec. 17014(d) safe harbor, he is presumed to be a nonresident from the time he went to work in China. If he does not meet the safe harbor, then he may or may not be a resident during his absence, depending on all of the facts and circumstances.

If the OP's son came to California temporarily, expecting that he would soon go elsewhere to work, then his domicile remains in Texas and he was never a California resident. The only indication that we know about that he intended or expected to be in California indefinitely is that he obtained a California driver's license. Of course there may be other facts tending in one direction or the other. For example, where is his voter registration?

The bottom line is that we do not have enough information to opine as to his resident status. And it may not be an academic question, since California does not allow the Sec. 911 exclusion and has no foreign tax credit.

Katie in San Diego

In article , snipped-for-privacy@yahoo.com (Alan) writes: | Dan Lanciani wrote: | > In article , katiej snipped-for-privacy@yahoo.com (Katie) writes: | > | > | The California driver's license might raise some questions. Why was | > | he in California for 6 months? Why did he get a California driver's | > | license? | > | > Does California still require you to get a California driver's | > license if you stay in the state more than 30 (or was it 60?) | > days regardless of reason or residency (assuming you wish to | > drive legally in California, of course)? | > | > Dan Lanciani | > ddl@danlan.*com | > | From the DMV: | | If you are a visitor in California over 18 and have a valid | driver license from your home state or country, you may drive in | this state without getting a California driver license as long as | your home state license remains valid. | | If you take a job here or become a resident, you must get a | California driver license within 10 days. Residency is | established by voting in a California election, paying resident | tuition, filing for a homeowner's property tax exemption, or any | other privilege or benefit not ordinarily extended to nonresidents.

Given that California requires you to get a California driver's license if you take a job even if you are not a resident (again assuming you wish to drive legally in California) can they still use your obtaining a California driver's license as evidence of residency?

Not tax related but I've wondered: if you work in California but live in another state does California allow you to obtain a California driver's license without giving up your home state's license? Do other states allow their residents to hold a California license in addition to their own?

Dan Lanciani ddl@danlan.*com

See Katie's reply. Taking a temporary job does not require you to get a driver's license. So if there is no intention to stay.. don't get a license... because if you do... CA may use that to show intent to become a resident.

In article , snipped-for-privacy@yahoo.com (Alan) writes: | Dan Lanciani wrote: | > In article , snipped-for-privacy@yahoo.com (Alan) writes: | > | Dan Lanciani wrote: | > | > In article , katiej snipped-for-privacy@yahoo.com (Katie) writes: | > | > | > | > | The California driver's license might raise some questions. Why was | > | > | he in California for 6 months? Why did he get a California driver's | > | > | license? | > | > | > | > Does California still require you to get a California driver's | > | > license if you stay in the state more than 30 (or was it 60?) | > | > days regardless of reason or residency (assuming you wish to | > | > drive legally in California, of course)? | > | > | > | > Dan Lanciani | > | > ddl@danlan.*com | > | > | > | From the DMV: | > | | > | If you are a visitor in California over 18 and have a valid | > | driver license from your home state or country, you may drive in | > | this state without getting a California driver license as long as | > | your home state license remains valid. | > | | > | If you take a job here or become a resident, you must get a | > | California driver license within 10 days. Residency is | > | established by voting in a California election, paying resident | > | tuition, filing for a homeowner's property tax exemption, or any | > | other privilege or benefit not ordinarily extended to nonresidents. | > | > Given that California requires you to get a California driver's | > license if you take a job even if you are not a resident (again | > assuming you wish to drive legally in California) can they still | > use your obtaining a California driver's license as evidence of | > residency? | > | > Not tax related but I've wondered: if you work in California | > but live in another state does California allow you to obtain a | > California driver's license without giving up your home state's | > license? Do other states allow their residents to hold a California | > license in addition to their own? | > | > Dan Lanciani | > ddl@danlan.*com | > | See Katie's reply. Taking a temporary job does not require you | to get a driver's license.

Ok, I may just be a bit slow today, but I don't see how you get that interpretation from the DMV text you posted. Where does it make a distinction between temporary and non-temporary jobs?

What if your California job is decidedly non-temporary but you live in (commute from) an adjacent state. Do you need a California driver's license?

Dan Lanciani ddl@danlan.*com

The website just contains the bare necessities. One has to look to Division 6 Chapter 1 of the CA Motor Vehicle Code. Feel free to browse the code. It's at

My answer was derived from a conversation with DMV staff when I was on a short term temporary assignment when I was domiciled in NJ. It was also awhile ago.

Like if you live on the Nevada side of Lake Tahoe and work on the Ca side? I don't know. I do know that the Vehicle Code does define residency as the place where one is domiciled for purposes of getting a license.

[big snip]

| > Ok, I may just be a bit slow today, but I don't see how you get | > that interpretation from the DMV text you posted. Where does it | > make a distinction between temporary and non-temporary jobs? | | The website just contains the bare necessities.

Plus apparently some stuff that isn't even necessary. :)

| One has to look | to Division 6 Chapter 1 of the CA Motor Vehicle Code. Feel free | to browse the code. It's at

On (admittedly cursory) reading I can't figure out where the job- related driver's license requirement comes from at all (unless it has something to do with a job that is itself driving and then it sounds like you need the license first anyway).

However, were I the original poster's son and if the FTB asked me why I got a California driver's license I would quote the DMV's summary and explain that I interpreted it in the obvious way. I needed to support myself while I was in California temporarily visiting with my family before heading overseas and it sure sounded like I was required to have a California driver's license to comply with the law.

[I would probably resist the temptation to be snarky and ask if the FTB would be making the same kind of argument if the situation were reversed. That is, if I had been a long-time resident of California and switched my driver's license to Texas for six months before heading overseas I'll bet the FTB would not be claiming that I had changed my domicile to Texas. :]

| > What if your California job is decidedly non-temporary but you | > live in (commute from) an adjacent state. Do you need a California | > driver's license? | > | Like if you live on the Nevada side of Lake Tahoe and work on the | Ca side?

Yes, like that. However, since I see nothing in the actual regulations to support the DMV's statement the question is pretty much moot.

Dan Lanciani ddl@danlan.*com