A resident is anyone who:
- Lives in California for other than temporary or transitory purposes, or
- Is domiciled in California, but outside California for temporary or transitory purposes.
A non-resident is any individual who is not a resident.
A part-year resident is any individual who is a California resident for part of the year and a nonresident for part of the year.
Safe Harbor: An individual domiciled in California who is outside California under an employment-related contract for at least 546 consecutive days will be considered a nonresident unless:
- The individual has intangible income (stocks, bonds, notes, etc.) exceeding $200,000 in any taxable year during which the employment-related contract is in effect, or
- The principal purpose of the absence from California is to avoid personal income tax.
The spouse of the individual covered by this safe harbor rule will also be considered a nonresident while accompanying the individual outside California for at least 546 consecutive days. 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.
Special note: We have seen many issues arise regarding CA residency over recent years. CA is a high tax state and it is advantageous to avoid claiming CA residency. However, CA aggressively conducts residency audits. When such an audit is conducted, CA will often pull your bank and credit card records. The purpose is to determine whether you have transactions that occurred in CA and if they can identify a pattern that leads to residency status. Please be careful and make sure you consult with a CPA or attorney if your situation may be questionable.