California income tax refund for period of non-resident status / WFH due to coronavirus

[Anonymous]

I work for one California's tech companies who have recently decided to allow their employees to work from anywhere until at least early 2021. However, said tech company is still collecting and sending my wages/salary to the state of CA although I no longer keep any properties/residence/connection/travel and won't have such thing for the rest of 2020. 

To be clear on my situation above:

- was hired for onsite work in California and have been a CA resident for years.

- Coronavirus happened, moved out of state before California's 6 month residency rule (183 days)

- My car title/registration, drivers license/insurance, apartment rental were all cancelled and moved out to a state other than California before the 6 month rule.

- my employer continues to deduct and forward CA income taxes to California's Franchise Tax board although my nexus to the state of California for residency purposes no longer exists and the work (for purposes of tax year 2020) is no longer based or performed in the state of California for the remainder of the year.

My questions:

- I should be entitled to receive a refund of my income taxes upon filling them after January 1st 2021? 

[TomD8 · Accepted solution]

You remain a CA resident for tax purposes as long as your domicile is in California.  Your domicile is your main, permanent home.  A person can have only one domicile at time. You were clearly domiciled in CA prior to your move.

Your domicile does not change until you abandon your domicile in CA and establish a new domicile in another state.  Your new domicile is established when you begin living in your new home in the new state.  That is the date you become a resident of the new state, and cease being a resident of CA.  It is not established by the date of your new drivers license, car registration, etc.   That is because some people wait weeks or even months after a move to change their DL or license plates.

You didn't say when your move occurred.  If it occurred in 2020, you will have to file a 2020 CA tax return as a part-year resident.

With regard to the "six month rule" you mentioned,  CA Publication 1031 actually states, "You will be presumed to be a California resident for any taxable year in which you spend more than nine months in this state."   https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf  , page 5

But that only applies to individuals who are domiciled in another state and living in California temporarily.  It does not apply to your situation.

You'll find a good discussion of the concept of "domicile" in this reference:  https://www.halversontax.com/residency-domicile-issues/#:~:text=California%20Code%20of%20Regulations...

Finally, CA will refund any excess withholdings when you file your 2020 return.

[Anonymous]

Thanks for the detailed response. Legally, my lease in California is ending June 31st 2020 (30 day notice). I think this is the date i need to use for my return and this is the date that I would be liable for CA income taxes until for 2020.

However, I started moving out in the middle of May 2020. While I could use that date in my CA returns as my last california 'residency' date I think I could have liability here until my lease is up? or is it okay to report the actual date that I began moving my domicile to another state although the major paperwork to establish residency/domicile elsewhere is not yet complete (drivers license and car registration transfers)

[TomD8]

You become a resident of your new state (and cease being a resident of CA) on the day you begin living in your new permanent home in the new state.

Your domicile isn’t determined by your lease expiration or drivers license or car registration.

[aQUnpm2]

However, if @Anonymous  moves back to California within 2 years, they will be responsible for all taxes as if they were a California resident the whole time