"Katie" <katiej_1958[at]yahoo.com> wrote:
- quote -

You may have misunderstood what I meant when I said "income
earned outside of the state". I was talking about income
earned while physically outside of the state, not
out-of-state source income while resident in the state. You
are correct about the out-of-state source income for
residents.

Regards, Dan

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- quote -

Kuwait is part of the Persian Gulf combat zone. You were
correct to exclude the income for both federal and
California purposes.

Katie in San Diego

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Katie wrote:
- quote -

thanks for all your replies.
Here's some more info, any comments are welcomed. thanks.

She's a CA residence. She was on tour to Kuwait for
operation Iraqi Freedom from Aug 2005 to July 2006. On her
2005 W2, her income from the tour is categoried in Box 12,
(under Q or W, I think. don't have the w2 in front of me
right now. It said something like non-taxable pay.)

I excluded those amounts from her return(Fed and CA).

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Katie wrote:
- quote -

You are not missing anything. I am missing something. I
just finished a tax return for family members one of whom is
stationed outside of CA while the spouse is living in CA. I
had excluded the military pay in determining the tax owed to
CA. Then I answered the query.

You are obviously correct as a CA domiciliary is always
taxed on all income unless the state allows for an exclusion
(combat pay as an example) or provides a credit for taxes
paid to another state on the same income.

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d.l.schumacher wrote:
- quote -

There was no need for you to file returns as a California
resident during that time, however, as long as you were not
stationed in California. When you were stationed outside
California on PCS orders, you were a nonresident for income
tax purposes although your domicile remained in California.

- quote -

California has never excluded out-of-state source income of
residents from income tax. If you are a nonresident, you
are taxable only on income from California sources.

Katie in San Diego

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A.G. Kalman wrote:
- quote -

snip

Alan, this puzzles me a bit. I am not aware of a blanket
exclusion of income from overseas service on temporary
orders for a California resident service member. I believe
it would be excluded only if the service was in a combat
zone, a qualified hazardous duty area, or a contingency
operations zone.

What am I missing??

Katie in San Diego

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s o wrote:

- quote -

Is California her home of record, or is it somewhere else?

If California is her home of record, then she is presumed to
be domiciled in California. (That's theoretically a
rebuttable presumption, but you'd have to go some to rebut
it.) As such, she is a resident when she is stationed in
California. If she is stationed somewhere else on permanent
military orders (PCS), she is a nonresident (because she is
absent for a purpose that is not temporary or transitory -
see CRTC Sec. 17014).

If her overseas assignment was on PCS orders, she was a
nonresident during her absence. If it was a temporary
assignment, e.g., TDY, etc., she remained a resident during
her absence.

If her home of record is outside California, she is not a
California resident at any time, whether stationed here or
not, due to restrictions placed on the states by the federal
Servicemembers Civil Relief Act.

Katie in San Diego

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s o wrote:

- quote -

Assuming she is a California domiciliary (her permanent home
is in CA) then she remains a CA resident unless she moves
due to permanent change of station orders. I assume that
she spent 5 months overseas on temporary orders. Her
military pay while serving overseas is not subject to CA
tax. This is true even if she did not serve in a combat
zone. See CA pub 1032 for information on how military
personnel are taxed in CA.

http://www.ftb.ca.gov/forms/05_forms/05_1032.pdf

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"s o" <jou128[at]yahoo.com> wrote:

- quote -

I spent 20 years in the military and, although I was only
stationed in California for 8 weeks of that 20 years,
retained my California residency (driver's license, voting,
etc.) for the entire 20 years.

California used to exclude income earned outside of the
state from state income tax. If this is still the case (as
it appears to be), then your sister would be able to exclude
the income from her military service outside of the state
from her state return. The state web page for the state
income tax forms has numerous references relating to
"military". The following is pulled from page 53 of the
state income tax instructions on the state web page:

"Military Personnel - Servicemembers domiciled outside of
California, and their spouses, may exclude the member's
military compensation from gross income when computing the
tax rate on nonmilitary income. Requirements for military
servicemembers domiciled in California remain unchanged.
Military servicemembers domiciled in California must include
their military pay in total income. In addition, they must
include their military pay in California source income when
stationed in California. However, military pay is not
California source income when a servicemember is permanently
stationed outside of California. For more information, get
FTB Pub. 1032, Tax Information for Military Personnel."

Hopefully, this information is useful.

Regards, Dan

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s o wrote:

- quote -

Since her domicile is in California, and assuming she was on
temporary duty assignment overseas, she must file as a
California resident.

See Calif. FTB Pub 1032 for more information.

-Mark Bole

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"s o" <jou128[at]yahoo.com> wrote:

- quote -

Given California's high tax rate, perhaps the better question
is "does she HAVE to claim Calif. residence."

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My sister lives in Calif but she was stationed overseas for
about 5 months in 2005. For her Calif. return, can she claim
Calif. residence?

thanks.

s o

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