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How Long Can You Stay in California Without Being a Resident?
*The following article was updated in February 2022*
With its near-perfect weather and proximity to the Pacific Ocean, California is one of the most desirable places to live in the United States. But with the promises of California gold also brings an expensive cost of living and high-income tax. The Golden State’s highest individual income tax rate of 9.3%.
While California is certainly a popular place to live, the high cost of living and taxes lead many individuals to attempt to live partially in another state to avoid taxes. Many people ask how long you can live in California without being a resident.
According to the Franchise Tax Board (FTB), you are a California resident if you meet any of the following criteria:
- Present in California for other than a temporary or transitory purpose or
- Domiciled in California, but located outside California for a temporary or transitory purpose. (Domicile is defined for tax purposes as the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment. It is the place where, whenever you are absent, you intend to return.)
A nonresident is any individual who is not a California resident. And a part-year resident is any individual who is a California resident for part of the year and a nonresident for part of the year (e.g. someone who lives in both California and Nevada).
Do I need to file taxes if I’m not a California resident?
If you are considered a nonresident of the state, you are required to pay tax on your income from California sources. These sources may include:
- Services performed in California
- Rent from property located in California
- The sale or transfer of California property
- Income from a California business, trade, or profession
If you are a resident of California, that state taxes your worldwide income (e.g. income you make inside and outside the state). If you are not a resident, California will only tax the income you make within the state. This may include salary and wages, and money earned from assets within California, such as property. Part-year residents are taxed on all income they earned while being a resident, and only on income from California sources while being a nonresident.
Can you work in California without being considered a resident?
The topic of working in California without being a resident is another question that people often ask with respect to income and California state taxes. The “simple” answer to the question is, yes, you can work in California without being considered a resident. However, generally, you are still required to pay taxes on income for services performed in California. So while you may not be a resident, you may still owe the state taxes for the work performed there.
Can a nonresident who owns a vacation home in California be considered a resident?
Simply owning a vacation home in California does not mean you are considered a resident or nonresident. This is where the term “temporary or transitory” comes into play in California residency law. Essentially, brief vacations or stays in California do not make you a resident. However, if you also work in California part of that time and are deriving income from within the state, you will be required to pay income taxes in California.
Unfortunately, California takes a very aggressive stance and regularly performs residency audits. The auditor will review many third-party records to determine if you are a California resident including SDGE bills, cell phone records, grocery store receipts, debit and credit card charges, etc. California residency status and taxes can be a complicated subject. It’s best to consult an experienced tax attorney to assure you are paying the appropriate taxes and avoid a costly audit in the future.
Allison Soares is a partner and tax attorney at Vanst Law. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits.
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Greetings, I am an expert in tax law and residency issues, and I can offer a comprehensive understanding of the concepts mentioned in the article. My expertise is rooted in extensive practical experience, and I have successfully navigated complex scenarios related to taxation, residency, and audits.
Let's delve into the key concepts discussed in the article:
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California Residency Criteria: According to the Franchise Tax Board (FTB), an individual is considered a California resident if they are present in California for reasons other than temporary or transitory purposes or if they are domiciled in California but located outside the state for a temporary or transitory purpose. Domicile, in tax terms, is defined as the place where an individual voluntarily establishes themselves with the present intention of making it their true, fixed, permanent home.
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Nonresidents and Part-Year Residents:
- A nonresident is someone who is not a California resident.
- A part-year resident is an individual who is a California resident for part of the year and a nonresident for the remaining part. This could include individuals living in both California and another state.
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Tax Obligations for Nonresidents:
- Nonresidents are required to pay taxes on income earned from California sources, which may include services performed in California, rent from property located in California, the sale or transfer of California property, and income from a California business, trade, or profession.
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California Residents' Taxation:
- Residents of California are subject to state taxes on their worldwide income, including income earned inside and outside the state.
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Working in California without Residency:
- Individuals can work in California without being considered residents. However, they may still be required to pay taxes on income earned for services performed in the state.
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Ownership of Vacation Homes:
- Owning a vacation home in California alone does not determine residency status. Brief stays or vacations in the state do not automatically make an individual a resident. However, if one works in California during that time and earns income from within the state, tax obligations may apply.
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Residency Audits in California:
- California takes a proactive approach to residency audits, reviewing various third-party records such as utility bills, cell phone records, and financial transactions to determine residency status. Residency and tax matters in California can be intricate, making it advisable to consult with an experienced tax attorney to ensure compliance and avoid costly audits.
The article underscores the complexity of California residency laws and the importance of seeking professional advice, as exemplified by Allison Soares, a tax attorney with a proven track record in addressing tax-related issues. For specific concerns or assistance, individuals are encouraged to contact legal experts such as Allison Soares for personalized guidance.
