US citizen foreign resident.

Our son is a full year resident of a foreign country. He gets his mail sent to our house in California, including his investment account and bank account. Does he need to file a CA state tax return?

Reply to
PeterL
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Focus on page 2 to 3.

If he intends to return to California, then his stay abroad is considered temporary absence and he is still considered to be a California resident. There is a safe harbor rule whereby you can be considered a non-resident if out of state for over 1.5 years on an employment related contract (see page 2).

What are the answers to the questions in part D of page 2?

Factors to consider: ? Amount of time you spend in California versus amount of time you spend outside California; ? Location of your spouse and children; ? Location of your principal residence; ? Where your driver?s license was issued; ? Where your vehicles are registered; ? Where you maintain your professional licenses; ? Where you are registered to vote; ? Location of the banks where you maintain accounts; ? Location of your doctors, dentists, accountants, and attorneys; ? Location of the church, temple or mosque, professional associations, or social and country clubs of which you are a member; ? Location of your real property and investments; ? Permanence of your work assignments in California; and ? Location of your social ties.

Reply to
removeps-groups

Well, he lived in Texas for 3 yrs prior to moving overseas. Before that he was again overseas. So we are only a convenient place for him to send his mail, including his US bank acct., investment acct, and driver's license. So he actually has not lived in Ca for the last 9 yrs.

Reply to
PeterL

Wouldn't that make him a Texas resident then?

He was a Texas resident after he was a California resident, and he has never resided in California since becoming a Texas resident, right?

Which state is his driver's license from?

Seth

Reply to
Seth

Well that's the deal. He moved back home to CA for just a little bit after Texas, then he went overseas. He did not live or work in Texas for all of 2007. He has never worked in CA. But all his mail and his driver license is CA. He does not own a car nor real estate. His only connection to CA now is his DL and the addresses of his US bank acct. and investment acct.

Reply to
PeterL

,

Why did he obtain a California driver's license? How long was he in California before he left for the foreign country? Why is he in the foreign country? How long does he expect to be there? What are his plans after he returns to the US?

If he did change his domicile (his primary home) from Texas to California before he left the country, he would still be a nonresident of California if he is absent on an employment-related contract for an uninterrupted period of at least 18 months. Such an absence is "uninterrupted" as long as he is not in California for more than 45 days of any taxable year. Calif. Rev. & Tax. Code Sec. 17014(d).

If his absence is not employment-related, or for some other reason he does not meet the safe harbor, then the question is whether his domicile changed from Texas to California before he left the country, and if it did, whether his absence from California is temporary or transitory. In order to change domicile, generally a person must meet all of three requirements: (1) abandon the previous domicile (move away from it); (2) move to and reside in a new location (i.e., light somewhere); and (3) intend to remain in the new location permanently or indefinitely. Whether the OP's son met all three of those tests depends on all of the facts and circumstances. Moving his bank and investment accounts to California and obtaining a California driver's license could be interpreted to reflect an intention to return to live in California after his foreign activites are over and indicate a change of domicile. If he lives in California after he returns to the U.S., questions may be asked, and depending on all of the facts and circumstances, he could be considered a California resident during his absence. However, even if he is domiciled in California, he is a nonresident if his absence is not for a temporary or transitory purpose. Also, unless he came to California from Texas with the intention of making a permanent home here, his domicile probably remains in Texas even if he left no physical ties there.

There is no simple yes or no answer; it depends on all of the facts and circumstances. However, it is unlikely that the question will ever arise unless he lives in California after he returns to the US.

Katie in San Diego

Reply to
Katie

,

Because he comes home for vacation every so often and it's easier to have a CA DL instead of Texas, where he maintains no residence.

He was in CA for a couple of months before moving away, but has not worked while in CA. He is employed in the foreign country, and expects to be there for the foreseeable future. He has no plan to return to the US at this time.

Yeah that's his situation.

Since he dosen't owe any CA taxes (I checked by filling out his CA tax return). So would it be simpler just filling out his CA return, so there won't be any question if California comes calling because his

1099 from his bank acct and investment acct all list a CA address?

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Reply to
PeterL

Is the reason he does not owe any CA taxes because of the foreign earned income exclusion -- IRS form 2555 which reduces your foreign earned income (mostly wages, self employment income, but not interest, dividends, capital gains) by about 85k? If so, there might be a time when his foreign salary grows to over 85k, and interest, dividends, capital gains may become sizeable too in the future. If he files a CA tax return for 2007 and owes nothing, no problem. But in the future he might owe something. If he suddently stops filing a CA return when that happens, that might give them FTB reason to wonder what is going on. If he has not filed a CA return in 9 years, keep it that way.

Reply to
removeps-groups

The California Franchise Board is very aggressive and has a long memory. A few years back, I gave a talk in California from which they withheld tax, so since I live in New York, I filed a return to get it back. Instead of a check, I got a form letter telling me that they'd taken it because my wife had underpaid her 1992 California taxes (before we got married), in a year when she moved from Tokyo to Palo Alto, due to a mistake by her tax preparer writing down the date that she moved.

If he has a California license and gets mail at a California address, they're going to presume that he is a California resident, and you should have incontrovertible documentation that he is not. This suggests that filing a California return would be a bad idea unless you are sure that he'll never ever owe California tax.

Not related to taxes, if he really spends all his time somewhere else, the somewhere else doubtless has a time limit for getting a local license that he's probably long past.

R's, John

Reply to
John Levine

BTW, I forget to add the the foreign earned income exclusion is not recognized by California. So if he took 85,700 or 10,000 or any amount, there would be a California adjustment of 87,500 or 10,000, etc -- ie. the California AGI would be larger than the federal.

Reply to
removeps-groups

So did you manage it to get it back eventually?

Reply to
removeps-groups

As others have noted, California does not conform to the IRC Sec. 911 exclusion, so I doubt that he would owe no California tax if he were a resident. However, it appears that he will meet the CRTC Sec.

17014(d) safe harbor. Therefore, he is a nonresident of California regardless of where his domicile may be. He has no filing requirement since he is a nonresident and has no California source income. (Income from intangibles, such as bank and brokerage accounts, has its source at the residence of the owner, not the location of the payer.)

Filing a California return would start the running of the statute of limitations and forestall correspondence from the FTB generated by the

1099s from the bank and brokerage accounts. Note that in order to do that you must disclose ALL of his 2007 income, from all sources, and that there is no Sec. 911 exclusion. However, since his California source income (Schedule CA-540NR, Col. (e) is zero, his tax liability is zero.

Katie in San Diego

Reply to
Katie

Nope. It was 15 years ago, we don't even know where to find the guy who made the mistake, and it wasn't all that much money.

R's, John

Reply to
John Levine

That is a gross understatement. Attempts of the Franchise Board to tax non-residents are legendary.

Dick

Reply to
Dick Adams

My guess is they're just as bad to residents.

Stu

Reply to
Stuart Bronstein

I happen to run a tiny non-profit with a part-time California employee, and the CFB writes me about once a year to garnish his pay for some ancient tax liability or other.

In my case, my wife moved from Japan to California and was a part year resident, but the problem was that her tax accountant wrote down the wrong date on the California return. They grabbed money for the time between when the return said she arrived and when she actually did arrive. Good luck untangling that 15 years later.

R's, John

Reply to
John Levine

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