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Comment by asdfasgasdgasdg | Hacker News Reader

I know that we have a tendency on this site to oversimplify things, but if you read the list of things you have to do to demonstrate residency elsewhere, it really is quite simple. If you actually live elsewhere like a normal person and are only back in California occasionally for vacation, you're at little risk of being audited and even less risk of being assessed taxes. The problem comes in when you try to have your cake and eat it. For example, you might run into trouble if you're trying to work and live in Cali five months and thirty days a year without paying California taxes.

I know for me, as a relatively high income individual, the FTB did not even make a peep about our residency change. They didn't even ask for any documentation, to the best of my recollection.

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I moved six years ago. I got demand letters from the CA tax board for four years after I left. I didn't owe them a dime but they still tried. Had to call and submit paperwork every time. At least the CA tax board people are super agreeable. It was annoying but less so because they were nice.

This year was the last year I owed CA taxes. You still owe them on shares that vest that you earned when you were in CA. Looking forward to not filing taxes with them next year.

Do you know if this is true wrt options as well?

Not a tax expert but IIRC since they were earned in CA, they generally are taxed when they result in a net gain of some sort (e.g. sold directly or exercised). Go to Section E of the FTB's publication 1100.

urgh maybe I should talk to a tax expert. The section discusses NSOs but I have ISOs. I also don't know how it's impacted by the fact that the company I work for is based in Boston (options were granted after I moved to Cali though), and I'm mainly curious as to how it would be impacted if I move to an income-tax-free state before the options vest

FTB Pub 1004, Section D goes into ISOs in greater detail.

https://www.ftb.ca.gov/forms/misc/1004.html#D-Incentive-Stoc...

RSU's? Exercised options? My understanding is that you would pay taxes on shares sold. Shares not sold are not yet income. Taxes get paid when RSU's vest but that is usually done by your company on your behalf and the numbers will show up in your tax paperwork. A potential wealth tax may side step that however. Either way I let my tax lawyers figure all that out.

This isn't right. They are counted as income when they vest. They will appear on your W-2. When you sell them is not important for the purpose of income taxation.

Yeah I think the phrasing threw me off. There are taxes paid at the time of vesting of RSU's (vs options) but that is usually done by your employer before you even see the stock in your stock management accounts. The bigger and more ugly taxes come from selling off the stock.

Depends on how long you wait to sell, and if what happens to the asset price in the mean time. I sell all my shares the day after they vest or the same day. I pay basically zero net taxes on that action.

This throws me for a loop every time I interact with them. FTB folks on the phone are always very nice and helpful.

The fact that they're nice and polite in contrast with literally every other state agency who's taking your money is an indicator that they don't have a legal leg to stand on in many cases and don't want people digging in their heels and hiring a lawyer.

My partner lived and worked in CA in the early 2000's. Moved to NYC in 2004. Had zero ties to CA after that. Switched her driver's license, voter registration, filed and paid taxes in NY, owned and operated a company in NY, had no CA bank accounts or investments, never set foot back in the state. CA still would regularly come after her about every other year and make her go through the same process of calling and sending them paperwork to convince them that she didn't live there. Her bank accounts would get frozen for weeks at a time and she's paid lawyers thousands of dollars to clear it up. That continued regularly until 2014, when we moved abroad and she closed her US bank accounts. CA probably still thinks she's a resident but now there aren't any bank accounts for them to go after.

This Is One example that Freedom in USA Is a "flexible" concept expecially for the authorities

Was the bank account opened in California? That may be the reason.

> had no CA bank accounts

> Was the bank account opened in California? That may be the reason.

That shouldn't be a justification if the person doesn't actually live in the state anymore.

I have bank accounts in states I haven't lived for decades and that hasn't been any issue. Heck I even autodeposit my salary (from California) to my primary bank account in a different state, out of habit.

(It's good for credit rating to keep long-standing accounts open, so that's why I never close accounts if I move.)

Do you know whether she filed the right partial-year CA tax filing for the year you moved? It almost sounds like she missed a step that would "close out" the CA tax records...

My wife and I moved overseas around the same time, filing one CA non-resident/partial year filing. In subsequent years, we only filed IRS returns with the foreign earned income exclusion, etc. and had no further issues. It was the other, ongoing treasury department reporting requirements that were a pain, not taxes per se. We eventually moved back and had another CA partial-year return to start things up again.

We even used a trusted relative's CA address as our mailing address for federal tax filings and US financial accounts we kept open while abroad. We did let our CA drivers licenses lapse while getting new ones overseas.

LA did the same thing to me for 6 years. They put me into collections at some point, which somehow never showed up on my credit report (thankfully), but every single year they'd harass me about taxes, and I'd need to fax them documentation.

Same story here. I moved from CA to WA on Jan 4 of one year where that meant I worked a total of two days in CA for that calendar year and it took me at least 4 years of threatening letters and never-ending phone calls before they gave up their claim that I owed CA taxes for half that new year.

> For example, you might run into trouble if you're trying to work and live in Cali five months and thirty days a year without paying California taxes.

Like many states with income taxes, California taxes income earned in California by nonresidents, so if you work in California at all you will owe California taxes.

I didn't realize it worked that way until WFH. I guess it makes some sense but it's really annoying because despite being able to work from anywhere actually working outside your home state for any amount of time becomes really complicated really fast.

Only hop around between WA/NV/TX/FL/AK/WY/SD.

This is something I've always found interesting because many Americans snidely refer to tax cheats as, at best, one rung about the lowest form of criminal on earth. But then you find out they've been on a week long business trip to CA or did a bit of work on the laptop while on vacation in Europe and so themselves are evading taxes.

> been on a week long business trip to CA

I understand your point, but people who do this are still paying 100% of their federal income tax and 100% of the income tax for the state they reside in.

That gets complicated if you live in an income tax-free state. But it feels substantively different from the person who parks their money off-shore to pay no tax to anyone.

I remember this being publicized some years back when a Super Bowl was being held in California, and someone calculated that one team would have to pay California more in taxes for their presence in the state than they would themselves be paid for the privilege of losing the Super Bowl.

CA taxes the income for the time period you work in the state. They couldn't pay more in taxes than they earned. The amount they paid in taxes for CA was likely quite low, as their income during that time probably wouldn't come close to the top bracket for yearly income.

>States tax a player based on their calendar-year income. They apply a duty day calculation which takes the ratio of duty days within the state over total duty days for the year. That ratio is then multiplied by the player’s salary to arrive at a state’s allocable income.

https://www.forbes.com/sites/kurtbadenhausen/2016/02/03/cali...

This article is misleading, inaccurate, and reflects poorly on forbes. It's phrased as if they're paying that much tax on the superbowl winnings, but they're being taxed on their normal earnings, during the time they are in CA, which is the case for a number of states with income tax. The article also claims they're paying the top rate, without considering marginal taxes.

I recall an investor friend who made a lot of money in the 1st dot com. He moved to nevada according to the law well before his windfall. CFTB hired private investigators to just follow and harass him constantly for almost two years while they tried and failed to assess him taxes he did not owe them.

CA FTB has an office in Reno for this very purpose.

It doesn't matter when your windfall happens. If you acquired stock while living in the state, you owe taxes on that when it becomes liquid. He owed those taxes.

The big one is if you still work for a company that only has Californian offices that requires you to visit for work. That's the leash a lot of tech workers will find hard to break.

Yes, being a frequent aerocommuter in an income tax state like CA is of limited use, when it comes to avoiding taxes. To me, this is a feature, not a bug. I don't want people causing massive pollution by flying back and forth to the office each week to avoid taxes. It's definitely not something that we should encourage.

Whew definitely don't look at Elon Musk's private jet usage in that case.

Count yourself lucky.

I’d say it was California that was behaving that way…unless you take the position that you can be a resident in multiple states…in which case you should be able to vote in multiple states, claim unemployment in multiple states, have driver’s licenses in both states etc.

If they did request documentation, that would have been fine with me in any case. I had it, and it's reasonable for them to request it. They do have a legitimate interest in preventing and prosecuting tax fraud.

> If you actually live elsewhere like a normal person and are only back in California occasionally for vacation, you're at little risk of being audited and even less risk of being assessed taxes.

It seems simple but in practice often is not for anyone that has enough money for the state to care about.

I know many people who moved out and California was aggressively after them for years even though they fully moved and lived elsewhere and had sold away every last scrap of property they had in CA to avoid having any connection.

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