Overseas in 2022 while working for the company in California

[adm]

I had to be overseas in 2022.  So I was out of the country for 365 days while still working (W2) for the same (since  2021) company in California .  On W2 the residency and deductions are reflecting my Californian residency.

1. Should I still pay all CA taxes?

2.  Could I get any exemptions on federal taxes?

[BillM223]

#1. - it depends. This is because CA is likely still your domicile, BUT you might be considered a nonresident for 2022 (it depends on how long you were gone).

CA says, "Temporary and Transitory Absences from California

If you are domiciled in California and you worked outside of California for an uninterrupted period of at least 546 consecutive days under an employment contract, you are considered a nonresident. This provision also applies to the spouse/RDP who accompanies the employed individual during those 546 consecutive days. However, you will not qualify under this provision if you are present in California for a total of more than 45 days during any taxable year covered by the contract, or if you have income from stocks, bonds, notes, or other intangible property in excess of $200,000 for any taxable year covered by the contract. For more information, go to ftb.ca.gov/forms and get FTB Pub. 1031."  Note, you can get FTB Pub 1031, but you have to give them your email address so they can email it to you (I have done that with other forms, so they actually will send it, I just don't know how long they will take at this time of year).

So, if you have not been out of California for 546 or more days, then you are still a resident of California because you have not changed your domicile. If you are still a resident of California, then you owe state tax.

Your domicile is where you get your mail, where you are registered to vote, where you own property, etc. As you can see, there are a number of factors that go into someplace being your domicile. It's the place you plan to return to. You stay a resident of a state, even when you move overseas, until you take positive steps to change your domicile - just sleeping someplace else doesn't do it.

So, while you were overseas, did you take any steps to change your residence? Did you apply for a residence permit in the new country? Did you buy property there? Did you take any steps with the local authorities to notify them that you were changing your residency? These are steps to take if you want to show that you are changing your domicile.

#2. No answer yet (maybe someone else will wander by).

#3. Yes, it appears that you may be eligible for the Foreign Earned Income Exclusion. Please see this IRS page for more information. Note the reference to the Interactive Assistant - this is an easy way to find out if you are eligible.

There is also the Foreign Tax Credit, but you have to actually pay foreign taxes to get this credit. Did you?

[adm]

Great tips! Let me provide additional information to make my questions more specific

[ErnieS0]

Generally, you will remain a California resident unless you abandon your residency. You don’t say whether you are still overseas, nor do you say whether you are a U.S. citizen or resident alien.

California does follow the 546-day rule which says an individual domiciled in California who is outside California under an employment-related contract for an uninterrupted period of at least 546 consecutive days will be considered a nonresident unless any of the following is met:

• The individual has intangible income exceeding $200,000 in any taxable year during which the  employment-related contract is in effect.
   
• The principal purpose of the absence from California is to avoid personal income tax.

See: Safe Harbor on page 4 of Publication 1031 Guidelines for Determining Resident Status.

Your location at the time you purchased private shares of your company is not relevant. It’s possible your residency when you sell the shares may impact how they are reported. However, since, presumably, these shares were only available to you because you worked at the company, they are likely taxed by the U.S. and California because they are effectively connected with a trade or business in the U.S.

California does not have a foreign-earned income exclusion, so all your income would be taxed to California if you are a resident.

If you provided more than half the support for your mom, it’s possible you can claim her as a dependent if: 

• They aren't claimed as a dependent by someone else
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident
• They aren’t filing a joint return with their spouse
• They lived with you the entire year (exceptions apply)
• They made less than $4,400 in 2022
• You provided more than half of their financial support

See: Who can I claim as my dependent?