California Residency Issues
Overview
Resident - A California resident includes:
Anyone who is in California for other than a temporary or transitory purpose, or An individual who is domiciled (has his permanent home) in California (CA), but outside CA for a temporary or transitory purpose. (Cal. Rev. & Tax. Code Sec. 17041) A California resident who is outside the state for a temporary or transitory purpose is still considered to be a California resident.
Related FTB Publications and Forms
-
Pub 1017 – Resident and Nonresident Withholding Guidelines
-
Pub 1031 – Guidelines for Determining Resident Status
-
Pub 1100 – Taxation of Nonresident Individuals Who Change Residency
-
Forms 587, 588, 589 590P – Nonresident withholding adjustment forms
-
Form 540NR – Nonresident and Part-Year Resident Return
Resident
A resident of California is taxed on income from all sources -both from within and outside of California.
Example - Resident: Taxpayer is a CA resident and has the following income:
| Total | CA Income | |
| Wages earned in California | $ 50,000 | $ 50,000 |
| Wages earned in Canada | 30,000 | 30,000 |
| Canadian Equivalent SS | 5,000 | 5,000 |
| Rental income from Colorado | 1,000 | 1,000 |
| Sale of land in Nevada | 15,000 | 15,000 |
| Pension from New York State | 12,000 | 12,000 |
| Interest from an Arizona bank account | 20,000 | 20,000 |
| Total | $ 133,000 | $ 133,000 |
Non-resident
A non-resident of California is any person who is NOT a California resident. Non-residents are taxed only on income from California sources. (Cal. Rev. & Tax. Code Sec. 17015)
Example – Non-resident: Taxpayer is a CA non-resident and has the following income:
| Total | CA Income | |
| Wages earned in California | $ 50,000 | $ 50,000 |
| Interest from a CA bank account | 1,000 | |
| Rental income from CA property | 1,000 | 1,000 |
| Sale of land in Nevada | 15,000 | |
| Wages earned in New York | 30,000 | |
| Interest from Arizona bank account | 20,000 | |
| Total | $117,000 | $51,000 |
Part-Year Resident
A part-year resident means a taxpayer who meets the following conditions:
• Is a resident of California for a period of the taxable year, and
-
Is a non-resident of California for a period of the taxable year.
A Part-Year Resident is Taxed on:
-
All income while received as a resident of California, and
-
Income from California sources while a non-resident. (Cal. Rev. & Tax. Code Sec. 17015.5)
Example –Part-year resident - Taxpayer became a California resident on July 1 of the tax year. He earned the following income during the tax year:
| Total | CA Income | ||
| NV wages | Jan 1 to Jun 30 | $50,000 | -0- |
| NV Rental Income | Jan 1 to Dec 31 | 8,000 | 4,000 |
| CA Rental Income | Jan 1 to Dec 31 | 8,000 | 8,000 |
| California wages | Jan 1 to Jun 30 | 15,000 | 15,000 |
| California wages | July 1 to Dec 31 | 30,000 | 30,000 |
| CA PERS Pension | Jan 1 to Dec 31 | 12,000 | 6,000 |
| Int. from a CA bank | Jan 1 to Dec 31 | 2,000 | 1,000 |
| Arizona wages | July 1 to Dec 31 | 5,000 | 5,000 |
| Int. from an AZ bank | Jan 1 to Jun 30 | 2,400 | -0- |
| Total | $132,400 | $69,000 |