Do I have to pay California tax from Australia?

July 10, 2002

Subject:  question about CA state tax for expatriots
From:  Laura Simmons
Date:  Mon, 17 Jun 2002

Can you help me figure out how to avoid paying an unbelievable amount of CA state tax because I moved to Australia for 1 year? I left CA in September of 2000 and my current accountant is telling me that I owe $2275 in taxes because CA doesn't exclude foreign income. Is there a way to legally avoid this since I didn't live in CA?

Thanks.

Laura Simmons

Answer

Date:  28 Jun 2002

Hello Laura,

You have stumbled onto one of the most complex areas of California tax law. Your accountant is probably right. California residents, even when they temporarily leave the state, are subject to tax on their worldwide income. In order to avoid California tax, you would have to demonstrate that your intention was to not return to California and show you severed your ties to the state. That's hard to do when you left for such a brief period of time.

Good luck!
Mike Gray

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