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Posted by thoughtexp on March 13, 2008, 7:20 pm
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Quick Summary of our tax situation:
- My wife & I both lived in NY from Jan-Apr 2007 . I worked for a TX-
based employer while we were resident in NY.
- I moved to TX in May 07 , and continued to work for the same
employer.
- My wife moved to CA in May 07 to start a new job.
My question is only regarding CA state taxes. I'd assumed that we'd
only need to pay CA state taxes on my wife's CA-sourced income from
05/2007 onwards as a part-year resident, since I had no CA-source
income.
However, I've read that since TX is a community property state, half
of what I earned belongs to her. So it seems that we'd need to pay CA
state taxes on all of my wife's CA-sourced income PLUS 1/2 of the TX-
sourced income I earned from May till the end of the year.
Is this correct ? Is there any way to establish that my wife's
domicile is not in CA, or otherwise exclude my TX-sourced income from
being subject to CA state taxes ?
I guess I'm quite confused on what her domicile state needs to be. If
it helps, we've both spent far more time in TX in the past (5+ years)
than in CA. However, we don't own any property and rent apartments in
both locations. Also, we're both currently employed indefinitely but
are looking to move to either state if we can both find jobs there.
Is there a presumption of domicile in CA based on employment/stay
there, or does there have to be definite intent to stay in CA
permanently in order to establish domicile ?
Thanks,
thound
--
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Posted by D. Stussy on March 14, 2008, 1:27 am
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> Quick Summary of our tax situation:
>
> - My wife & I both lived in NY from Jan-Apr 2007 . I worked for a TX-
> based employer while we were resident in NY.
> - I moved to TX in May 07 , and continued to work for the same
> employer.
> - My wife moved to CA in May 07 to start a new job.
>
> My question is only regarding CA state taxes. I'd assumed that we'd
> only need to pay CA state taxes on my wife's CA-sourced income from
> 05/2007 onwards as a part-year resident, since I had no CA-source
> income.
> However, I've read that since TX is a community property state, half
> of what I earned belongs to her. So it seems that we'd need to pay CA
> state taxes on all of my wife's CA-sourced income PLUS 1/2 of the TX-
> sourced income I earned from May till the end of the year.
>
> Is this correct ? Is there any way to establish that my wife's
> domicile is not in CA, or otherwise exclude my TX-sourced income from
> being subject to CA state taxes ?
> I guess I'm quite confused on what her domicile state needs to be. If
> it helps, we've both spent far more time in TX in the past (5+ years)
> than in CA. However, we don't own any property and rent apartments in
> both locations. Also, we're both currently employed indefinitely but
> are looking to move to either state if we can both find jobs there.
> Is there a presumption of domicile in CA based on employment/stay
> there, or does there have to be definite intent to stay in CA
> permanently in order to establish domicile ?
Since California is ALSO a community property state, it works the other way
also. You each have half of the other's income. Looks like
part-year-resident/non-resident returns all around.
--
<< ------------------------------------------------------- >>
<< 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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Posted by Katie on March 15, 2008, 8:33 pm
Please log in for more thread options On Mar 13, 4:20 pm, thought...@yahoo.com wrote:
> Quick Summary of our tax situation:
>
> - My wife & I both lived in NY from Jan-Apr 2007 . I worked for a TX-
> based employer while we were resident in NY.
> - I moved to TX in May 07 , and continued to work for the same
> employer.
> - My wife moved to CA in May 07 to start a new job.
>
> My question is only regarding CA state taxes. I'd assumed that we'd
> only need to pay CA state taxes on my wife's CA-sourced income from
> 05/2007 onwards as a part-year resident, since I had no CA-source
> income.
> However, I've read that since TX is a community property state, half
> of what I earned belongs to her. So it seems that we'd need to pay CA
> state taxes on all of my wife's CA-sourced income PLUS 1/2 of the TX-
> sourced income I earned from May till the end of the year.
>
> Is this correct ? Is there any way to establish that my wife's
> domicile is not in CA, or otherwise exclude my TX-sourced income from
> being subject to CA state taxes ?
> I guess I'm quite confused on what her domicile state needs to be. If
> it helps, we've both spent far more time in TX in the past (5+ years)
> than in CA. However, we don't own any property and rent apartments in
> both locations. Also, we're both currently employed indefinitely but
> are looking to move to either state if we can both find jobs there.
> Is there a presumption of domicile in CA based on employment/stay
> there, or does there have to be definite intent to stay in CA
> permanently in order to establish domicile ?
>
> Thanks,
> thound
>
It does make a difference what your intentions are. Are you and your
wife separated with no intention of resuming your marital
relationship? If so, under California law, if she is domiciled in
California, her earnings are not community income.
Assuming you and your wife are not estranged, what are your plans for
the long term? Is this long-distance marriage arrangement expected or
intended to be indefinite? Generally, married couples who are not
estranged have the same domicile, but it certainly is possible for
each of you to have your own domicile even if not estranged.
Your domicile is your true, fixed home and permanent establishment;
the place to which, whenever absent, you intend to return. You and
your wife may both be domiciled in California or Texas, or each
domiciled in your state of residence ... or you may both still be
domiciled in NY, for all I know. Assuming you were both domiciled in
NY before May 07, in order to change your domicile you must have met
all of three requirements: (1) abandoned your previous domicile
(moved away from NY); (2) moved to and resided in a new location; and
(3) intend to remain in the new location permanently or indefinitely.
Looking at each of you separately, it's possible that one of you has
established a new domicile while the other is working temporarily in
TX or CA and intends to join the other at some future time. Just
taking a job in a new location doesn't necessarily establish a
domicile there, although it is one fact to be taken into
consideration. If one (or both) of you are working in your current
location temporarily, no new domicile has been established and you're
still domiciled in NY -- a separate property jurisdiction.
Since TX and CA are both community property states, Dieter is correct,
if your domicile is in either of those states, and you are not
estranged, your current earnings are community income and must be
split 50-50 for California purposes. So California gets your wife's
community 1/2 of your Texas earnings, and both halves of her
California source earnings. Also you must file jointly if you file
jointly for federal purposes, because you (the CA nonresident spouse)
have CA source income.
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. >>
<< ------------------------------------------------------- >>
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Posted by thound on March 18, 2008, 8:53 pm
Please log in for more thread options Thanks for your responses.
Katie, the problem I have is in determining, or being able to
demonstrate, the specific state we intend to return to. We are not
estranged, and our long-distance arrangement is currently indefinite,
but we intend it to be temporary since one of us will return to the
first state we can both find jobs in. This could be TX or CA, but I
don't see a way to document or demonstrate this intent. As a result,
I
really can't determine the specific domicile based on "intent to
return".
We have met the three requirements you mentioned to change domicile
from NY, maintain no residence or other demonstrable ties there, and
have no intent to return there. And since there's no way to
demonstrate that one of us intends to move to join the other, it
would
seem that we could only claim to be domiciled in our current resident
states.
Also, as your responses indicate, a domicile in either TX or CA would
be equivalent for tax purposes. Even if my wife were to claim to be
domiciled in TX, half of my income for the period she is resident in
CA would still be taxable there. The only difference I can tell in
this case is that we would be able to file MFS, but this doesn't seem
to be a major advantage.
Please let me know if you think that claiming to be domiciled in our
current resident states seems incorrect or inadvisable.
-Thound
--
<< ------------------------------------------------------- >>
<< 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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Posted by Mark Bole on March 18, 2008, 10:06 pm
Please log in for more thread options thound wrote:
> Katie, the problem I have is in determining, or being able to
> demonstrate, the specific state we intend to return to. We are not
> estranged, and our long-distance arrangement is currently indefinite,
> but we intend it to be temporary since one of us will return to the
> first state we can both find jobs in. This could be TX or CA, but I
> don't see a way to document or demonstrate this intent. As a result,
> I
> really can't determine the specific domicile based on "intent to
> return".
You have one and only one domicile at any given time, and you do not
acquire a new domicile until you abandon the previous one (starting with
the one you acquire at birth).
> Also, as your responses indicate, a domicile in either TX or CA would
> be equivalent for tax purposes. Even if my wife were to claim to be
> domiciled in TX, half of my income for the period she is resident in
> CA would still be taxable there.
The other subtlety is this: domicile and residence are not the same
thing. The domicile of each spouse determines whether the community or
separate rules apply to the income of that spouse. The residence of
each spouse determines whether or not they owe tax on total income,
including community income of the spouse, to the jurisdiction of
residence. You always (potentially) owe tax on source income to the
source jurisdiction. A spouse domiciled in a community property state
with income in that state normally results in you having source income
in that state.
Consulting a professional in this situation would be reasonable.
-Mark Bole
--
<< ------------------------------------------------------- >>
<< 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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