California does not have an equivalent to the Federal foreign earned income exclusion provision. Since residents of California are taxed on ALL income, including income from sources outside California, the key is whether the taxpayer is a resident.

A safe harbor is available for certain individuals leaving California under employment-related contracts. The safe harbor provides that an individual domiciled in California, who is outside California under an employment-related contract for at least 546 consecutive days (18 months), will be considered a non-resident unless:

The spouse of the individual covered by this safe harbor rule will also be considered a non-resident while

accompanying the individual outside California for at least 546 consecutive days. Return visits to California that in the aggregate do not exceed 45 days during any taxable year covered by the employment contract are considered temporary. Individuals not covered by this safe harbor must determine their residency status based on their facts and circumstances. The determination of residency status cannot be solely based on an individual’s occupation, business, or vocation. Instead, all activities must be considered in the determination of residency status.

Away-from-home expenses - Taxpayers, who by the facts and circumstances are determined to be California residents, may be able to deduct away-from-home business expenses (for travel, meals and lodging) on their California tax return.