Leaving California is harder than you think…
09-23-2021, 08:15 AM
#1
Perennial Reserve
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Joined APC: Jan 2018
Posts: 10,594
Leaving California is harder than you think…
https://www.worth.com/the-california...ortune-intact/
An excerpt:
It’s not just billionaires like Elon Musk or celebs like Joe Rogan turfing for the allegedly greener pastures of states like Texas and Florida. Many of my clients are low profile, high net worth individuals eyeing the exit door, and there are others who have already made a break for it.
This isn’t just some concern of the uber wealthy. Single Californians pay a 9.3 percent rate once their income exceeds $58,635, which is enough of a bite to make anyone consider a move elsewhere. Couple this with the surge in popularity of remote work and suddenly the “California Exodus” seems a lot less theoretical.
But as The Eagles point out, “Hotel California” isn’t an easy place to leave.
This isn’t just some concern of the uber wealthy. Single Californians pay a 9.3 percent rate once their income exceeds $58,635, which is enough of a bite to make anyone consider a move elsewhere. Couple this with the surge in popularity of remote work and suddenly the “California Exodus” seems a lot less theoretical.
But as The Eagles point out, “Hotel California” isn’t an easy place to leave.
09-23-2021, 12:17 PM
#3
Gets Weekends Off
Joined APC: Apr 2017
Posts: 3,363
09-25-2021, 07:03 PM
#5
Gets Weekends Off
Joined APC: Jan 2018
Posts: 126
Leaving California was the best decision I ever made. Moved to a large city in the Southeast where I was able to build a brand new house in one of the nicer neighborhoods in town for the price of a 2 bedroom condo that needed some work in a mediocre at best area of LA. That was the biggest factor in the decision to move since I had pretty much ruled out home ownership in California. The lower taxes and gas prices are a bonus, as is not having to wait in long lines for everything from getting gas at Costco, to checking out at the supermarket, to going to the bathroom at a restaurant. All buildings have enough parking so you don't have to spend 15 minutes going around looking for a spot at any location and you don't have to plan your activities based on the traffic patterns. The improvement in QOL was night and day.
09-27-2021, 08:39 AM
#7
Gets Everyday Off
Joined APC: Aug 2016
Position: Relaxed
Posts: 6,381
Originally Posted by WacoQCF
Getting Blue state asylum seekers to leave their Blue state ideas behind isn’t as easy as it should be. It should be illegal to let Blue state transplants voting rights in local Red state elections for like 10 years.
09-27-2021, 10:07 AM
#8
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 37,780
Originally Posted by TransWorld
Why not put up a wall and prohibit them from leaving, like East Germany did? Escapees will be shot?
There was actually a recent, serious legislative proposal to continue to tax CA residents for ten years after they leave, to "discourage" and/or penalize departure.
Since I might want to leave myself eventually, I discussed this with every CPA and attorney I know who'd give me five minutes. General consensus is that it would be exceptionally unconstitutional and would be a non-starter. But they're thinking along those lines...
The bottom line with CA (and other similar deep blue states) is that you're home free as long as you're actually complying with the law. You can establish *legit* residence elsewhere, keep your house in CA and spend 5 months and 29 days in-state every year* and they can't touch you (federal rules, which they can't over-ride).
Where it becomes a problem is if you're not complying with the letter of the law, then you could be looking at prison, and they might be aggressive enough to actually make it home.
For pilots, you're going to get scrutinized if you leave but are still based there. I know people based in LAX/SFO who moved to vegas but kept their CA house and commute to work. So CA sees a house and a job in LA or SF but a claim of non-residency. So yeah, they're suspicious for sure. If you're doing that (I might someday) you REALLY need to play by the rules.
*Talk to your attorney & CPA, rules can vary slightly if two states have certain types of reciprocal agreements.
09-27-2021, 12:06 PM
#9
Perennial Reserve
Thread Starter
Joined APC: Jan 2018
Posts: 10,594
Originally Posted by rickair7777
Maybe they'll get to that eventually.
There was actually a recent, serious legislative proposal to continue to tax CA residents for ten years after they leave, to "discourage" and/or penalize departure.
Since I might want to leave myself eventually, I discussed this with every CPA and attorney I know who'd give me five minutes. General consensus is that it would be exceptionally unconstitutional and would be a non-starter. But they're thinking along those lines...
The bottom line with CA (and other similar deep blue states) is that you're home free as long as you're actually complying with the law. You can establish *legit* residence elsewhere, keep your house in CA and spend 5 months and 29 days in-state every year* and they can't touch you (federal rules, which they can't over-ride).
Where it becomes a problem is if you're not complying with the letter of the law, then you could be looking at prison, and they might be aggressive enough to actually make it home.
For pilots, you're going to get scrutinized if you leave but are still based there. I know people based in LAX/SFO who moved to vegas but kept their CA house and commute to work. So CA sees a house and a job in LA or SF but a claim of non-residency. So yeah, they're suspicious for sure. If you're doing that (I might someday) you REALLY need to play by the rules.
*Talk to your attorney & CPA, rules can vary slightly if two states have certain types of reciprocal agreements.
There was actually a recent, serious legislative proposal to continue to tax CA residents for ten years after they leave, to "discourage" and/or penalize departure.
Since I might want to leave myself eventually, I discussed this with every CPA and attorney I know who'd give me five minutes. General consensus is that it would be exceptionally unconstitutional and would be a non-starter. But they're thinking along those lines...
The bottom line with CA (and other similar deep blue states) is that you're home free as long as you're actually complying with the law. You can establish *legit* residence elsewhere, keep your house in CA and spend 5 months and 29 days in-state every year* and they can't touch you (federal rules, which they can't over-ride).
Where it becomes a problem is if you're not complying with the letter of the law, then you could be looking at prison, and they might be aggressive enough to actually make it home.
For pilots, you're going to get scrutinized if you leave but are still based there. I know people based in LAX/SFO who moved to vegas but kept their CA house and commute to work. So CA sees a house and a job in LA or SF but a claim of non-residency. So yeah, they're suspicious for sure. If you're doing that (I might someday) you REALLY need to play by the rules.
*Talk to your attorney & CPA, rules can vary slightly if two states have certain types of reciprocal agreements.
The Community-Property Trap
Another trap for the unwary – and it’s a big one – is how California treats community property for tax purposes, mentioned above. Even if a married couple achieves separate residency status, it doesn’t mean the nonresident is free from California income taxes, despite earning all income out of state. Here’s why.
Married California couples usually file joint state returns (it’s generally required if they file joint federal returns, and most do). In that typical situation, they don’t even need to think about community income as it has no special tax consequences. But if they file separate returns, half of each spouse’s community property must be reported on each return. The reason is obvious, but not something most married California couples need to worry about except in the case of a divorce or death: under California law community income belongs to each spouse equally. Accordingly, if one spouse makes $1,000,000 and the other makes $100,000 (assuming the income is all community and not separate), each will report $550,000 on a separate return (50% of the total $1,100,000 of community income), and pay taxes accordingly.
This usually doesn’t matter much if both spouses are California residents. But what if one spouse leaves California and sets up domicile and residency in another (lower-tax) state with the specific purpose of reducing state income taxes? Will the nonresident spouse still have to file tax returns reporting his or her share of the community property? Remember, California uses domicile status to determine community property rights, and it uses residency status to determine who is taxed. The rule is, if both spouses are domiciliaries of a community property jurisdiction (either another state or another country), then California’s community property rights apply. That means half of any community income belongs to each spouse.
Another trap for the unwary – and it’s a big one – is how California treats community property for tax purposes, mentioned above. Even if a married couple achieves separate residency status, it doesn’t mean the nonresident is free from California income taxes, despite earning all income out of state. Here’s why.
Married California couples usually file joint state returns (it’s generally required if they file joint federal returns, and most do). In that typical situation, they don’t even need to think about community income as it has no special tax consequences. But if they file separate returns, half of each spouse’s community property must be reported on each return. The reason is obvious, but not something most married California couples need to worry about except in the case of a divorce or death: under California law community income belongs to each spouse equally. Accordingly, if one spouse makes $1,000,000 and the other makes $100,000 (assuming the income is all community and not separate), each will report $550,000 on a separate return (50% of the total $1,100,000 of community income), and pay taxes accordingly.
This usually doesn’t matter much if both spouses are California residents. But what if one spouse leaves California and sets up domicile and residency in another (lower-tax) state with the specific purpose of reducing state income taxes? Will the nonresident spouse still have to file tax returns reporting his or her share of the community property? Remember, California uses domicile status to determine community property rights, and it uses residency status to determine who is taxed. The rule is, if both spouses are domiciliaries of a community property jurisdiction (either another state or another country), then California’s community property rights apply. That means half of any community income belongs to each spouse.
09-27-2021, 06:44 PM
#10
Gets Everyday Off
Joined APC: Aug 2016
Position: Relaxed
Posts: 6,381
There was a famous radio commentator who passed away earlier this year. He moved from NYC to Florida a number of years ago. Even though he had no property in NY and spent few if any nights there, the state auditors still came after him every year. The audits were nit picky. He owned no taxes, but had to spend thousands each year in CPA (and legal?) fees each year to disprove their conjectures. Part of it may have been auditors’ interest in a big time tax payoff, part may have been political revenge. But it was a royal pain for him, each and every year.
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