Any fellow Californians abroad? Worth it to maintain CA residency?
Posted by inebriated_otter@reddit | expats | View on Reddit | 5 comments
I'm an American, originally from California, currently fully living abroad (in Germany) and understand that, though CA state tax regulations are strict about taxing people abroad, there's a narrow avenue for those fully residing abroad to be exempt from state taxes via the Safe Harbor clause.
For various reasons (retaining state DL, flying back more often and spending more time with family in California) I'm considering dropping my nonresident status, becoming a dual resident of Germany/California for tax reasons and paying state tax. I'm however hesitant as to how much I'll be on the hook for, as well as other repercussions I'm not aware of. I'm not a very high earner (average for Germany, €48k pre tax / €32k after tax) so I'm not sure if it'll be a big chunk. Thoughts from fellow Californians abroad?
elevenblade@reddit
I’d take this up with an accountant who has experience with expats. In our case it made sense to keep California and the USA as our residence for tax purposes since we visit often enough and own real estate so we fall under the IRS “substantial presence” rule even though we spend most of the year in Sweden. Fortunately the USA and Sweden have a good agreement that prevents double taxation. Federal + CA state tax turned out to be pretty close to what we would pay in Sweden. We had to communicate transparently with the Swedish tax authorities but they agreed.
yunoeconbro@reddit
I am a non resident in california. I don't see any benefit of claiming residency. I pay taxes and get what?
abzz123@reddit
You will pay full CA tax on your income (9%-ish). It doesn’t make much sense imo. CA does not have any double tax treaties like US does, so there is no way to avoid paying full tax if you are CA resident.
Creative_Listen_7777@reddit
Establish residency in a State without State taxes like Texas or Florida. And believe it or not, South Dakota will give you residency really easily, I think all you have to do is stay overnight.
Mr_Lumbergh@reddit
This is my first year fully abroad, so I'm not sure yet. I still have a friend in Chino that collects my mail for me and it's the address that my US banks are tied to, but I haven't had to navigate that process just yet.