Leaving California? You may still have to pay taxes

Californians who move out may still face tax

People who left California may still have to pay California taxes.

LOS ANGELES - Ditching the Golden State for another U.S. state? You're not alone.

A study conducted by the U.S. Census Bureau revealed tens of thousands of Californians sought life elsewhere. Some reasons why people are leaving California include: high cost of living, lack of job opportunities, increasing tax burdens, and regulations.

Overall, 75,423 Californians left in 2023. Many residents are moving to other parts of the country for better opportunities, cheaper homes, and different laws.

But before you pack your bags and set your sights on a new beginning, don't forget there are measures you need to take - otherwise, you'll still have to pay those notorious California taxes.

California has nine state income tax rates, ranging from 1% to 12.3%. Your tax rate and tax bracket depend on your taxable income and filing status.

California's Franchise Tax Board has the ability to conduct residency audits and is responsible for monitoring the fine line between residents and non-residents. The FTB has the right to investigate how and when you left.

When it comes to California state taxes, there are three residency statuses: resident, part-year resident and nonresident. The FTB determines what portion of your income the state will tax. According to state law, you are presumed to be a California resident if you are in California for more than nine months.

The IRS has the ability to audit 3 or 6 years, but in California - that time frame expands to essentially, forever.

California uses several factors to determine your residency, like the amount of time you spent in the Golden State versus outside. Other factors the FTB considers include:

The location of the taxpayer's spouse and children;
The location of the taxpayer's principal residence;
Where the taxpayer was issued a driver's license;
Where the taxpayer's vehicles are registered;
Where the taxpayer maintains professional licenses;
Where the taxpayer is registered to vote;
The locations of banks where the taxpayer maintains accounts;
The locations of the taxpayer's doctors, dentists, accountants and attorneys;
The locations of church, temple or mosque, professional associations, and social and country clubs of which the taxpayer is a member;
The locations of the taxpayer's real property and investments;
The permanence of the taxpayer's work assignments in California; and
The location of the taxpayer's social ties. FTB Pub. 1031, Guidelines for Determining Resident Status (2010).

But the biggest factor of all, it seems, is your physical presence. Again, California presumes you are a resident if you spend more than 9 months in the state.

If you spend 6 months or less, you may qualify as a "seasonal visitor," but that's only if you don't work while you are in the state, and meet other criteria.

Even part-year residents are still taxed. You pay tax on "all worldwide income received while you are a California resident" and "income from California sources while you were a nonresident," according to the FTB.

In order to avoid paying taxes, you must prove you have left California - but that means more than just buying a home in another state. You must prove you have completely severed your ties to the Golden State and that you have permanent connections to another state.

And even if you do that, you may still owe taxes based on other factors - for example, if your spouse still lives in California, expect to pay up as community property rules in California treat half your income as half of your spouse's.

If you're a California resident but looking to chuck that and settle elsewhere, proceed with care and remember to take precautions. For example - getting a new state driver's license and surrendering your old California one, moving and registering your car in your new state, and registering to vote in your new state while canceling your old California voter registration. You can learn more on the FTB's website.

A study conducted by the U.S. Census Bureau indicates the top 5 states former Californians moved to were Texas, Arizona, Florida, Washington and Nevada. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming all do not impose state income taxes.

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