Author Topic: How to Never Pay CA State Income Tax Again!?  (Read 3064 times)

nomadnumbers

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How to Never Pay CA State Income Tax Again!?
« on: November 14, 2018, 09:40:42 AM »
Hi,

My wife and I were used to live in California. Thanks to GCC (and a few others well known bloggers in the FI/RE space), we thought hard about embracing FI/RE and take on a nomadic lifestyle. We finally pull the trigger this year and left California to travel the world. So far we are having a blast.

As part of our nomadic lifestyle, we plan to spend less than 2 months / year in the US (most of it will be spent in California where family and friends are).

Here is my primary question: What will it take to move our residency status outside of California so that we can "Never Pay CA State Income Tax again? :)

Here are some background about our situation:
  • I quit my CA W-2 job in 2018 and my wife plan on quit her CA W-2 job in 2019, after which we won't have any W-2 job in California.
  • We sold our primary home that we had in California back in 2015 and have been renting since then. We gave notice to our apartment in 2018.
  • We set up a Travel Mailbox (TM) mailing address and asked USPS to forward our email over there. Our TM address is located in NC. It is my understanding that this can't be use as a proof of residency. (as discussed on this forum post: http://forum.gocurrycracker.com/index.php/topic,28).
  • We expect to fund our nomadic lifestyle via passive income we are generating. This is coming from the following sources: 1) real estate investments (none of which are located in CA - though one of our mortgage company is based in CA), 2) dividends from our portfolio, 3) interested from savings & Certificate of Deposits from our bank accounts (which are still located in CA).
Here are my questions:
  • What will it take to move our residency status outside of California so that we can "Never Pay CA State Income Tax again?
  • Until we remain California resident, are there any income sources that can't be subject to California Income Tax? I don't think so but want to confirm with this community.
  • Since we have some investment properties that we are renting out in Texas (which is a no state income tax), can we use one of our property address to claim our residency in Texas without have to claim this property back as our main residence and ask our tenant to leave?
  • What is the minimum amount of time we should prove that we are living in a different state so we are not longer considered as CA residents?
  • Does the address our broker's have on file for us matter for tax purposes? Basically do we need to update them or will the IRS be only looking at the state in which we are resident?
  • Does anyone has does this transition away from California and if so do they have a list of steps they can share?
  • Will it be worth to get in touch with a tax professional for such matter? If so do you have any persons you would recommend?

Feel free to let me know if you need further information about our situation.
We are actively looking into this now as we want to become non CA resident in 2019!

Thanks!

gocurrycracker

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Re: How to Never Pay CA State Income Tax Again!?
« Reply #1 on: November 14, 2018, 10:34:42 PM »
California is one of those aggressive tax-collecting States, so it is import to cut ties ruthlessly and unequivocally. Words like "sever ALL ties" are used by others.

Go to a new State. Get driver's licenses, register to vote, open bank accounts, close the CA bank accounts, move all of your stuff outside CA (no storage unit.) Update your address with anybody who has it (No CA addresses anywhere!)

See a good discussion on bogleheads
https://www.bogleheads.org/forum/viewtopic.php?t=206626

And the people at taxes for expats
https://www.taxesforexpats.com/afl/CAtax?u=/articles/expat-tax-rules/the-state-of-california-can-expats-ever-leave-tax-wise.html