"PeterL" <po.n...[at]gmail.com> wrote:

- quote -

Well, we used to have a lot of controversy in CA over these
expatriate employment situations. There is a string of
State Board of Equalization decisions going back many years,
some going one way, some going the other. Fortunately since
1993 we have a statutory "safe harbor" which your son may be
able to meet, and therefore be considered a nonresident of
California.

Cal. Rev. & Tax. Code Sec. 17014(d) provides that if an
individual domiciled in California (as your son is; he is
not likely to establish a new domicile in Shanghai) is
absent from the state on an employment- related contract for
an uninterrupted period of at least 18 consecutive months,
he is considered to be a nonresident for income tax
purposes. For purposes of determining the duration of an
uninterrupted absence, returns to California totaling in the
aggregate not more than 45 days in any taxable year are
disregarded. This safe harbor does not apply to an
individual who has more than $200,000 of income from
intangibles (interest, dividends, etc.) or if the principal
purpose of the absence is tax avoidance.

Ideally your son has a written contract with his employer
setting out the terms and duration of his employment in
Shanghai. I haven't yet seen a published case where the
existence or nonexistence of a written contract (as opposed
to an oral agreement or simple common-law employment) was an
issue, but I wouldn't take the chance if I could help it.

If he has no federal income tax filing requirement, though,
his income presumably will be below California's filing
thresholds as well. I suspect that he will be required to
file a federal return. He may be eligible for the IRC Sec.
911 exclusion, which may offset all or most of his foreign
earnings, but that doesn't mean he doesn't have to file a
federal return and report his worldwide income. California
does not conform to the Sec. 911 exclusion, so if he remains
a resident, all of his earnings will be subject to
California tax.

Katie in San Diego

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Has he permanently moved out of California and into
Shanghai, with no present intent to return? If not, then
he's probably still considered to be "domiciled" in
California and therefore subject to California taxes
(assuming, of course, that he was resident in California
prior to the move. If he was resident in another state,
then the same analysis applies to that other state).

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"PeterL" <po.ning[at]gmail.com> wrote:

- quote -

While overseas he is considered a resident of whichever
state he lived in prior to going overseas. If that state
has a state income tax, he may need to file - check the
rules for that state.

This is why so many people try to establish Texas residency
prior to going on an overseas work assignment or deployment.

-Crystal

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"PeterL" <po.ning[at]gmail.com> wrote:

- quote -

Unless your son went to China before the end of December, he
must claim the foreign earned income exclusion using the
physical presence rule. (You must be a bona fide resident
for a full tax year before you can use that rule.) So, his
exclusion will be something less than the maximum of
$82,400. In any case, he must file a Federal return to take
the exclusion.

As to California, the need to file a tax return depends upon
his residency status. If he does not intend to return to
California and his actions support this, he probably does
not have to file. Katie in San Diego is the resident expert
on state residency here on MTM.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

PeterL <po.ning[at]gmail.com> wrote:

- quote -

Does he live with you now (prior to moving to Shanghai)?

If so, he remains a CA resident for CA tax purposes. If he
lives in another state prior to moving, getting mail sent to
CA won't give him residence there.

Seth

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

My son has gotten a job in Shanghai. He will be using our
address in California for his correspondence. Does he need
to file CA state? He probably would not have any federal
taxes.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >