From California to Texas

[fernandoln]

Hi, 

I have two questions:

1) I moved to Texas from California Jan 1st 2021. I am still employed by the same company and in their system I have a California address. I have been paying California state taxes all this year. Can I claim those taxes back? I plan to change my address in my job in August 2021.

2) How can I deduct moving expenses including I have been paying storage in California for 1 year now since I left the state. (I was traveling since August 2020 until Jan 2021 when I arrived to Texas).

Thank you! 

[KochuK]

Hi fernandoln, thank you for joining the "Ask the Experts: Moving" special forum today. I am happy to assist with your questions.

(1) Yes, upon Franchise Tax Board (FTB) inquiry, if you can establish/prove the permanent move from CA to TX on 1/1/2021, you can claim the CA income tax withholding back on your 2021 CA nonresident return with $0 income. If you can make sure your 2021 W-2 CA state wage is $0 by requesting the company payroll department, that will be the best scenario. If there is CA state wage, and you report $0 on your 2021 CA income tax return, there might be inquiry from FTB.

Please refer to page 10, section L "Meaning of Domicile" and "Change of Domicile" from FTB 1031.

https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf 

The more you can demonstrate establishing a new domicile in TX, and clearly giving up CA domicile, the better it is.

Below article cites some good examples.

https://www.nolo.com/legal-encyclopedia/what-is-your-domicile.html 

(2) Unless you are military, for everyone else,  the moving expense deduction has been suspended for tax years 2018 through 2025 as a result of the Tax Cuts and Jobs Act that was signed into law in late December of 2017. In general, no deduction for moving related expenses, such as storage fee.

Hope this helps.