California Nonresident Tax Planning

The key to remaining a California nonresident while living part-time in California is California Nonresident Tax Planning. At Lance Cross-Border, we break California Nonresident Tax Planning down into three discrete disciplines: (1) Cross-border Lifestyle Planning; (2) Managing your California “Footprint;” and (3) Income and Asset Restructuring (as needed). Each of these disciplines is briefly described in more detail below.

“Cross-Border Lifestyle Planning” is grounded in the process by which California determines whether you are a tax resident or a nonresident. Among other things, that process includes an analysis of: (i) up to 40 residence-related factors or possible connections with the State of California to determine whether you have a closer connection with your claimed state or country of residence or to California during a particular tax year; and (ii) the extent to which you may be considered to have benefited from the laws and protections afforded by the State of California. “Cross-border lifestyle planning” refers to effectively managing your connections with California and the degree to which you will be considered to benefit from its laws and protections, to improve your chances of defending your California nonresident tax status, if questioned.

If you don’t come to the attention of the California Franchise Tax Board (“FTB”) (or come to their attention in only limited ways), you may never be questioned about your residence status or be asked to file a California income tax return as a resident. At Lance Cross-Border, we help you remain “below the radar” by showing you how to reduce your California “footprint” to eliminate or minimize the amount of information that gets disclosed to the FTB “gratuitously.” It is often electronic disclosures that could have been prevented and gratuitous disclosures by the taxpayer that lead to inquiries from the FTB, or ultimately, a residence tax audit (see discussion below under the heading “California Residence Tax Audits”).

Whether you are ultimately determined to be a nonresident or resident of California, re-structuring the manner in which certain income is earned, assets are held and expenses are incurred can often limit the amount of tax California can assess. That, in turn, affects the FTB’s “cost-benefit” analysis of whether you are worth the cost to them of a residence tax audit. At Lance Cross-border, we employ many tax planning techniques for reducing the amount of your income which California can tax, to make you a less interesting target for a resident tax audit and to lower your exposure to a tax assessment.

At Lance Cross-Border Law and Tax, we have more than 40 years of experience assisting clients with California nonresident tax planning, including 28 years serving nonresident clients in Palm Springs, Palm Desert, Rancho Mirage, Indian Wells and La Quinta, among other desert communities. We invite you to browse through the information on our website and our blog about California nonresident tax planning. In it, you will find answers to some of the questions that you may have concerning nonresident tax problems or issues. We welcome inquiries concerning your specific tax situation. Feel free to call us at (760) 578-5093, or contact us via email at Brent@LanceCrossborder.com or by using our online contact form. We will respond to all relevant inquiries without any obligation. Why not put us to work preventing or solving California residence tax problems for you today?