Am I a Resident of California: FTB Residency Audit

Taxpayers often need to determine whether their California residency status. A resident is defined as any individual who meets any of the following:
• Present in California for other than a temporary or transitory purpose.
• Domiciled in California, but outside California for a temporary or transitory purpose.

A nonresident is defined as any individual who is not a resident. Moreover, 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.

Part-year resident

If you lived inside or outside of California during the tax year, you may be a part-year resident.

As a part-year resident, you pay tax on:

• All worldwide income received while a California resident; and
• Income from California sources while you were a nonresident

Nonresident

A nonresident is a person who is not a resident of California.

Generally, nonresidents are:

• Simply passing through
• Here for a brief rest or vacation
• Here for a short period of time to complete:
  • A job
  • A transaction
  • Contract work

Do I need to file a California Tax Return?

As a nonresident, you pay tax on your taxable income from California sources.

Generally, sourced income includes, but is not limited to:

• Services performed in California
• Rent from real property located in California
• The sale or transfer of real California property
• Income from a California business, trade or profession

Guidelines for determining California residency

The underlying theory of residency is that you are a resident of the place where you have the closest connections.

The following list shows some of the factors you can use to help determine your residency status. Moreover, since your residence is usually the place where you have the closest ties, you should compare your ties to California with your ties elsewhere. This is only a partial list of the factors to consider. No one factor is determinative. Consider all the facts of your particular situation to determine your residency status. I’ve listed the important factors to consider below:

• Amount of time you spend in California versus amount of time you spend outside California.
• Location of your spouse/RDP and children.
• Location of your principal residence.
• State that issued your driver’s license.
• State where your vehicles are registered.
• State where you maintain your professional licenses.
• State where you are registered to vote.
• Location of the banks where you maintain accounts.
• The origination point of your financial transactions.
• Location of your medical professionals and other healthcare providers

If an FTB auditor has contacted you about your residency, contact a tax attorney discuss the best course of action. We have experience in resolving FTB audits.