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California residence question (am I qualified for safe harbor) jechiang 06-08-2007
Posted by jechiang on June 8, 2007, 1:21 pm
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 California R&T Code Sec 17014 states: "For any taxable year
beginning on or after January 1, 1994, any individual
domiciled in this state who is absent from the state for an
uninterrupted period of at least 546 consecutive days under
an employment-related contract shall be considered outside
this state for other than a temporary or transitory
purpose."

Here's my situation:
I accepted an job at Beijing, China and have signed a
two-year contract with the company. The contract starts from
Aug. 15, 2006 and ends on Aug. 14, 2008. I still have my
house there, have a valid driver license, etc. I am
wondering for filing 2006 CA tax return, can I claim that I
am a non-CA resident because of this safe harbor rule? And
how about 2007 tax return? Do I have to wait until I have
lived in Beijing for 546 days before I can start claiming
that I am a non- resident? Or the non-resident status starts
at the time the contract starts as long as the contract is
more than 546 days?

The other questions is that the publication also says that
"Return visits to California that do not exceed a total of
45 days during any taxable year covered by the employment
contract are considered temporary." In my case, I lived and
worked in CA until Aug. 14, 2006, am I considered exceeding
the 45 days limit of return visit?

Thanks in advance!

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Posted by Katie on June 12, 2007, 1:06 am
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 jechi...@gmail.com wrote:

> California R&T Code Sec 17014 states: "For any taxable year
> beginning on or after January 1, 1994, any individual
> domiciled in this state who is absent from the state for an
> uninterrupted period of at least 546 consecutive days under
> an employment-related contract shall be considered outside
> this state for other than a temporary or transitory
> purpose."
>
> Here's my situation:
> I accepted an job at Beijing, China and have signed a
> two-year contract with the company. The contract starts from
> Aug. 15, 2006 and ends on Aug. 14, 2008. I still have my
> house there, have a valid driver license, etc. I am
> wondering for filing 2006 CA tax return, can I claim that I
> am a non-CA resident because of this safe harbor rule? And
> how about 2007 tax return? Do I have to wait until I have
> lived in Beijing for 546 days before I can start claiming
> that I am a non- resident? Or the non-resident status starts
> at the time the contract starts as long as the contract is
> more than 546 days?
>
> The other questions is that the publication also says that
> "Return visits to California that do not exceed a total of
> 45 days during any taxable year covered by the employment
> contract are considered temporary." In my case, I lived and
> worked in CA until Aug. 14, 2006, am I considered exceeding
> the 45 days limit of return visit?

You should file your 2006 return as a part-year resident.
You will be a nonresident for 2007 and a part-year resident
for 2008, assuming your overseas assignment ends as
scheduled and you otherwise meet the requirements of the
safe harbor. The 45-day test refers to time AFTER the
taxpayer has left the country to fulfill the contract.

You do not need to have been absent for 546 days in order to
claim nonresidence under the safe harbor. If you meet its
terms, you are a nonresident from the time you left the
state to assume your duties in the foreign country.

Just be aware that if unforeseen circumstances were to arise
and you were to return to California before the end of the
546-day period, you would have been a California resident
during your entire absence and would owe additional taxes.
If you had severed your ties with California when you left
(sold your house, moved away), you could argue under the
general rule that your absence was not for a temporary or
transitory purpose. Since you appear not to have severed
your ties with California, you will be a resident for the
entire period of absence if you return to stay before the
terms of the safe harbor are met.

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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by San Diego CPA on June 12, 2007, 1:06 am
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> California R&T Code Sec 17014 states: "For any taxable year
> beginning on or after January 1, 1994, any individual
> domiciled in this state who is absent from the state for an
> uninterrupted period of at least 546 consecutive days under
> an employment-related contract shall be considered outside
> this state for other than a temporary or transitory
> purpose."
>
> Here's my situation:
> I accepted an job at Beijing, China and have signed a
> two-year contract with the company. The contract starts from
> Aug. 15, 2006 and ends on Aug. 14, 2008. I still have my
> house there, have a valid driver license, etc. I am
> wondering for filing 2006 CA tax return, can I claim that I
> am a non-CA resident because of this safe harbor rule? And
> how about 2007 tax return? Do I have to wait until I have
> lived in Beijing for 546 days before I can start claiming
> that I am a non- resident? Or the non-resident status starts
> at the time the contract starts as long as the contract is
> more than 546 days?
>
> The other questions is that the publication also says that
> "Return visits to California that do not exceed a total of
> 45 days during any taxable year covered by the employment
> contract are considered temporary." In my case, I lived and
> worked in CA until Aug. 14, 2006, am I considered exceeding
> the 45 days limit of return visit?

If all indications are that you'll be away the entire 2
years, you CA filing status will likely be as follows based
on the above:

You'll be a part-year resident for 2006, non-resident for
2007 (unless you exceed the allowable number of days in the
state or perform and work for compensation while you're
here), and a part-year resident again in 2008 when you
return.

<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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