California Tax Resident or Non-Resident?
(and why you should care)
If you spend a considerable period of time in California each year and have developed significant contacts here you should be asking yourself this question. The State of California is hungry for tax revenue and believes that people who are present in California enjoying the benefits of all California has to offer for significant blocks of time each year should be paying their way.
“How will the California Revenue authorities become aware of my existence here?” The Franchise Tax Board has a number of programs designed to identify people who are here under circumstances that make them liable for filing a California income tax return. Those programs include, for example, looking at California homeowners who have a mortgage on their California property (and receive a Form 1098 from their lender), but don’t file a California tax return. They can also examine property tax payments made by persons having an out of state address on their tax bills. Rumor has it that they even resort to taking down out-of-state and foreign license plate numbers on luxury cars driving through the desert. Sometimes, somebody (like a disgruntled former spouse, lover or employee, or a jealous or vindictive neighbor) just turns you in.