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Level 2

Question

CA -> Nevada State Income Tax Filing for next year's tax filings.

Forum|Forum|5 years ago
November 1, 2020
14 replies
68 views

I was a student in Illinois earlier this year, then went to California for a period before coming down to Nevada and earning income there. I filed resident CA state tax last year, and have a CA drivers license. Is it possible to declare NV residency for when I file my taxes for 2020 in 2021? If so, does this mean I do not have to file any State tax in 2021 as NV does not require it? Please let me know if I can provide any addition information that would be telling.

Not A Product Question

xmasbaby0

Level 15

A piece of information you left out-----did you work and receive income in IL or CA in 2020?

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Guavalord54Author

Level 2

Thank you for the question. I did not work or receive income in IL or CA in 2020. However, I do hold bank accounts in CA which distribute dividends/interest. The only work and income I have in 2020 is sourced from where I currently live in NV. That is a big reason why I suspect I may qualify for NV residency and not file any state income tax returns. Hope that helps.

TomD8

Alumni - Champ

You cannot just "declare" residency. States have specific rules as to who is and is not a resident for tax purposes.

In what state is your domicile - your main, primary home? the place you intend to return after temporary absences?

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Guavalord54Author

Level 2

Thank you for the question TomD8. As I currently live and work in NV as a permanent, exempt, full time employee, I would say my NV address is the place I intend to return after temporary absences. My main confusion here is that there are no concrete guidelines I have found online that classify someone as a resident, part-year resident, or non resident in CA or NV. I understand there are complex cases and factors for classification include location of living, location of financial assets, drivers license, and location of purchases. In addition to what I said in my post, I do still have bank accounts in CA, but have worked and earned income exclusively in NV for 2020, albeit for the later part of the year. This is why I believe I may qualify as a NV resident with limited connections to CA, and not file a state income tax return.

TomD8

Alumni - Champ

It sounds like you previously lived in CA. If that's so, when did you change your domicile to NV? Be aware that if you were previously domiciled in CA, CA considers you a resident for tax purposes until you abandon your CA domicile and establish your domicile in another state. See Section L on page 10 of this reference for more detail:

https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf

Once you become a domiciliary resident of NV (and thus a non-resident of CA), only your CA-source income would be subject to taxation by CA.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Guavalord54Author

Level 2

As I'm preparing to file my taxes now. I just want to be clear about what my state tax filings should look like for 2020 based on the info I provided and the insight of the messages above. From Sept 2020 through the end of the year, Nevada was the place I lived and worked in. I held a permanent job, showed up to work, spent money, and paid for a place to stay in Nevada. However, I still had a California drivers license that whole time. How important is having that NV license when determining residency? Knowing that I never had a Nevada license in 2020, would I still be considered a CA part time resident and NV resident, so I would only need to file for CA part time resident tax?

TomD8

Alumni - Champ

Your drivers license has nothing to do with establishing your state of residence. You became a resident of NV on the day you began living in your new main, primary home (your domicile in tax terminology) in NV.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Guavalord54Author

Level 2

Thanks for the response Tom. Again, what I want to do is figure out what state taxes I am required to file. I was domiciled in CA for 2019. There are two possibilities from a CA point of view for my state taxes from the information I provided in the above comments. They would either consider me a resident or a part year resident for tax purposes. I am not so sure that determination is so black and white. Here's why.

Looking at this post on how CA auditors may determine residency,

https://ashleyquinncpas.com/practices/nevada-residency/

there are a variety of factors including drivers license.

This is supported by the document you provided me earlier

https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf

page 10 section L where changing of domicile requires "Intent to remain in the new locality permanently or indefinitely as demonstrated by your actions."

Actions maybe including getting a license in your new domiciled state.

From a NV point of view,

https://www.leg.state.nv.us/division/research/publications/factsheets/residency.pdf

page 2 of this document describes a submission of a domicile form as well as the need to acquire a NV license 30 days after one becomes a resident. I did not do either of those tasks.

Knowing that CA has a policy that I must prove, beyond a reasonable doubt, that I am domiciled elsewhere. If CA were to audit me, would they communicate with NV, or ask me directly, for this information (like where is your NV license)? If so, would my actions of leaving CA in Sept 2020 for NV, spending money, working, and living in NV enough for them to consider me a part year resident despite the the fact I may not have done the NV tasks?

Guavalord54Author

Level 2

can anyone help me here? ^^

TomD8

Alumni - Champ

The key concept here is one of domicile. I think Section L of CA Publication 1031 explains this pretty well.

Once you establish your domicile in a new state, for tax purposes you become a resident of that state. You can have only one domicile at a time. For tax purposes, a change in domicile results in your becoming a part-year resident of each of the two states.

2020 Publication 1031 Guidelines for Determining Resident Status

Thus, if you changed your domicile from CA to NV during 2020, you would file as a part-year resident of CA.

Your state of residency for tax purposes is established by the location of your domicile.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.