Dual resident of CA and OR, other state tax credit

[Dunlog]

We moved from California to Oregon in February 2021 with my husband's job. I have continued working for my CA based company remotely. 

We intended to change domicile and took the following steps: rented our CA house to arms length tenants, registered our cars in Oregon, received new Oregon licenses, voted in local OR elections only and our kids are in school here, all our belongings were moved to OR. I got permission from my employer to work remotely and changed my address at work and withholdings to Oregon.

Recently, we have decided to return to CA from August 2022. I understand CA can be aggressive about residency. We will be 6 days short of the safe harbor rules for CA residency. Ie my husband would be 540 days outside of CA, not 546. Our return to CA points to CA domicile I believe.

I think we should file a full year resident return for CA in as CA domiciled residents. We also qualify as Oregon statutory residents for income earned in Oregon for the part year in 2021.  I intend to file a part year resident return in Oregon.

Does that sound right? Also is it to claim my OR tax credit for OR sourced income on the CA resident return? 

Thank you

[MaryK4 · Accepted solution]

You could file as California residents and Oregon statutory residents.  You will report all income earned while you were working in Oregon (both your husband's job and your remote work performed in Oregon).  Then when you file your California state tax return, you will use the Credit for taxes paid to another state on any of the Oregon income you reported and paid tax on (so you will not be double taxed).