Better? Like a piranha is better than a shark? I love my
software provider but it's based in Utah. Somehow, I spend
the first month, every year, checking their worksheets for
the 540...and especially the 540 NR...

Nan, EA in LA

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"Nan Eklund" <naneklund[at]aol.com> wrote:

- quote -

But Nan! - remember the bad old days of the Form SI?
This one is much better <g> !!

--
Therese Thomas, EA - San Diego County

(760) 751-2542 phone/fax line

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Ana wrote:

- quote -

I wouldn't assume that he would remain a California resident
if he changes all his things such as DL, voting, etc., to
another state. However, I will confirm that he will remain
liable for California state income tax - but as a
non-resident.

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andreesa[at]hotmail.com (Ana) wrote:

- quote -


I am assuming that after the move, you will be performing all of your
services for your employer in Utah. In other words, you will not be
commuting to California to work.

California defines a resident for tax purposes to include (a) persons
who are present in California (regardless of domicile) for a purpose
that is not temporary or transitory, plus (b) persons who are
domiciled in California and are absent for temporary or transitory
purposes. CRTC Sec. 17014.

Right now, both you and your husband appear to be domiciled in
California. Domicile is a common-law concept, usually not defined in
statutes; it is your true, fixed home and permanent establishment, the
place to which, whenever absent, you intend to return.

In order to change your domicile, you must generally meet all of three
requirements: (1) move away from the previous domicile; (2) move to
and reside in a new location; and (3) intend to remain in the new
location permanently or indefinitely.

If you move to Utah to accept employment there in a job that may last
indefinitely (i.e., not to perform a particular assignment that will
take a relatively short period of time), your absence is not for a
temporary or transitory purpose and you are probably not a California
resident even if you have not changed your domicile. However,
California is a community property state. If your domicile remains in
California, even though you are a nonresident and all of your earnings
are from services performed in Utah, your husband's community 1/2 of
your earnings will be subject to California tax if he remains a
resident.

I would suggest in this situation that you and your husband do
everything possible to change your domicile (both of you) to Utah.
(Husband and wife do not necessarily always have the same domicile,
but usually they do.) Your husband may remain a California resident
because of his employment here. However, I won a case at the protest
level a few years ago for a client who moved to Nevada with his wife
and children but continued to commute to work in California at his
previous job, staying in the former family home which they continued
to own. I convinced the hearing officer that the husband's presence
in California each week was for the temporary purpose of performing
services for his employer and that, in fact, both his domicile and his
residence had changed to Nevada. Of course he had California source
income from his California employment. However, the gain on his sale
of stock in his corporation was not subject to California tax because
he was a nonresident at the time it was sold.

I take it you are planning to buy a home in Utah and continue to rent
in California. Obviously both of you should be on the title to the
Utah property, and both of you should change the paperwork indicia of
domicile and residence (voter registration, drivers license, vehicle
registration, bank accounts, etc.) to Utah to the extent practical.
You will probably have to keep a car registered in California for his
use while here, but everything else should go to Utah and be
registered there. (And don't take the Nissan Sentra to Utah and leave
the BMW in California <G> .) Everything that is "near and dear" to you
both (art work, keepsakes, antiques, family heirlooms and photographs,
trophies and awards, etc.) should go to Utah. Nothing should be left
in the California home beyond what is necessary for your husband to
use while "camping out" there during the week. If your current
California home is relatively substantial, you may want to consider
moving to a smaller home or apartment for your husband's use since he
will be on his own during the week and won't have time for yard work,
etc. because he goes to Utah every weekend. If you downsize in
California, you may be able to move some furniture and household goods
to Utah, which would be a good thing. Other California ties should be
severed to the extent practical, and both of you should establish as
many ties to Utah as possible. Think of social and civic
organizations, church, etc. And document, document, document.

Then you would file as Utah residents and as nonresidents in
California. Of course all of your husband's earnings from services
performed in California will be subject to California tax; Utah would
give you credit for the tax paid to California, so in effect you would
pay state tax on his earnings at the higher of the two states' average
rates for your filing status and income level. However, no part of
your (or his) earnings from services performed outside California
would be taxable in California, and none of your income from
intangibles (interest, dividends, gain/loss on sale of stocks or other
intangibles, etc.) would be subject to California tax.

There is always a risk that the FTB would argue that your domicile did
not change and/or that he remains a California resident because he is
employed here. (An auditor would almost certainly take that
position.) However, if you keep really good records, you should be
able to sustain nonresidence for both of you. Particularly, keep
meticulous records of the time each of you spends in each place.
Contemporarily maintained calendars, travel documents (e.g. plane
tickets or e-ticket documents if he flies back and forth, gas, food
and lodging receipts if he drives), etc. will be essential. You want
to be able to document the fact that he "goes home" to Utah at every
reasonable opportunity. If either of you travels, for business or
vacation, each trip ideally would begin and end in Utah and you would
maintain complete documentation to support that.

In general, you should both conduct yourselves in a manner consistent
with the expressed intent to make Utah your permanent, established
home. Any action inconsistent with that intent could be a problem.

Be advised that there are no guarantees in this area, and that you may
not be successful no matter what you do. However, if you do
everything I have suggested and maintain good records, I believe you
have a good chance of sustaining a position of nonresidence.

Remember that California has a four-year statute of limitations.

Katie in San Diego

The foregoing is intended for educational purposes only and does not
constitute legal or professional advice.

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If a husband and wife file a joint Federal tax return and
one spouse was a California resident for all year while the
other was a nonresident for all or PART of the year, they
must file a California NR joint return. That's a California
NonResident return which shows California source income.

Darn form is wierd and gets more wierd every year. I'd
advise you to; get a California preparer to work with you.

Nan, EA in LA

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I need some advice with regards to California tax status. I
am currently a CA resident (my husband and I rent right
now), but I intend to purchase a home in Utah shortly. Once
the purchase is made, I intend to change my primary
residence to Utah from California. I know that I need to
change my driver's license, voter registration, etc. to
effect that change. In addition, my company will pay me as
a Utah resident. I do not intend to move back to
California.

Normally, I think that this would be pretty straightforward.
But, here's my catch. My husband is going to continue
living in California (his job is there) during the week and
commute to Utah on the weekends. I assume that he will
continue to be a California resident as a result. Is there
any chance that the FTB here will also view me as a
California resident as a result? Do we need to do anything
like separate bank accounts, credit cards accounts, car
titles/registrations, take my name off of our rental lease,
or anything else to ensure that the FTB does not consider me
a resident, too?

As you might have guessed, my primary concern is that, as
the major wage earner in the family, I do not get taxed by
California just because my husband continues to live and
work there. I know that Utah state income taxes are lower
than California state income taxes, so I want to avoid a
potential tax liability for California if possible.

Thanks in advance.

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