Is California Domicile a Bad Idea?

[GoneStreamin]

I appreciate all of the information (and opinions). We'll have to have a discussion with our accountant about some of these things. Our main concern is the level of difficulty of being a nomad in California. Other states seem to have made it so easy and we're unsure if California is the same, as we won't have a permanent residence as many of you seem to have, and we're not sure how that will affect things like vehicle registration, drivers licenses, voter registration, etc. We'll figure everything out in due time. I'm glad we have a handful of months to get things in order!

[Shiny16]

Originally Posted by PammieSue

I have lived in CA since I was a child, I have two sons still living here and my Landlord and Lady and sons have become my family, so I will keep my little grannyhouse with the incredibly low rent. Temperatures and weather, mountains, desert, oceans, culture, San Diego had it all. I am a service connected Veteran and my income is nontaxible. I will admit that our vehicle registrations are very high, as is the general all around cost of living.

My boyfriend Chris keeps his Texas residency because his Veterans Retirement Income IS taxable, and registration for his Jeep and the Airstream are very low cost. We live together here in San Diego, and visit Texas once a year for the Airstream to be inspected for its re-registration.

I suggest researching all the states to find one that gives you the best financial deal, like Chris you can still live here part of your year.

Your boyfriend Chris lives in CA full time with you but declares Texas as his residence. This is totally unfair to other CA residence who pay CA income tax. If you think nobody notices or cares I would say your wrong. I'm sure some of your neighbors notice his Tx plates and get annoyed by the fact that's he is not paying his share. I worked in CA one year and was required by my employer at the time ( the federal government) to register my car in Ca immediately because of complaints by local residents.
Ca is admittedly one of the highest tax states. Like everything expensive we have a choice of paying or doing without. Lying about your residence is stealing and fraud.

[Mike91208]

Originally Posted by zapper

I registered my Tundra vehicle at AAA in 2017, complete with commercial scale ticket as verification of the weight of the vehicle. I was told all PU trucks were considered commercial use whether used as such or not. (False assumption) As I understand it the CA PU licenses fees are based upon vehicle weight not value, as such AAA informed me that my license fees would NOT go down from year to year. But thank you for informing me that AAA may be incorrect and I may look forward to a piddley reduction from the outrageous, 2017 CA licenses fees next year. We'll see.

My Tundra is registered as a commercial vehicle. Longo Toyota did the registration (DMV has an office at their site they're so big.) I think the rep at AAA may be mistaken. I'd look into it. And, yeah, the discount is puny, but at least it's something.

[3wd67rg]

Originally Posted by Shiny16

Your boyfriend Chris lives in CA full time with you but declares Texas as his residence. This is totally unfair to other CA residence who pay CA income tax. If you think nobody notices or cares I would say your wrong. I'm sure some of your neighbors notice his Tx plates and get annoyed by the fact that's he is not paying his share. I worked in CA one year and was required by my employer at the time ( the federal government) to register my car in Ca immediately because of complaints by local residents.
Ca is admittedly one of the highest tax states. Like everything expensive we have a choice of paying or doing without. Lying about your residence is stealing and fraud.

Did you ever serve your country Shiny?

Did your mother ever teach you manners?

May I remind you this isn't Facebook.

[3wd67rg]

Originally Posted by graysailor

In response to Shiny16 I have a ParkModel home in AZ so I do pay some taxes. I pretty much split up my time in AZ and whatever other state I am traveling in.

Hey Sailor you don't owe any of us an explanation of why or what your financial decisions have been. You shared to help the Original Poster like we all did. Just because some cranky constipated ol' man, (honestly I thought he was a teenage drama queen), has decided to be thread police, judge, jury, and executioner, doesn't mean you must offer them any information. It's no one's business but yours sweetheart. Here, have a flower. I wanted to offer you a beer, but I don't think they have any yet.

[Shiny16]

Originally Posted by PammieSue

Did you ever serve your country Shiny?

Did your mother ever teach you manners?

May I remind you this isn't Facebook.

My parents taught me ethics and serving in the milatary does not give you the right to commit fraud.
Again if you honestly live in more then one state then by all means choose the cheaper one. To declare residency in a state you have no intention of living in solely for a tax advantage when you admit to living full time in another is dishonest and no different then wrongfully applying for welfare or food stamps. Do you honestly think it's fair that your boyfriend lives in and enjoys the benefits of California with out having to pay what other residents pay?
This thread was about advice on state residency. I think offering advice that is equal to committing fraud is bad advice and should be commented on.
If you don't see the ethical issue with your post. I'm sure others do. I'm sorry that makes you compelled to start name calling.
If your certain there is nothing wrong with your original post then forward it to the Ca state tax collector and see what the response is.

[nsbcpa]

As a CPA with nearly 40 years of experience with multistate issues......I can assure the previous poster that establishing domicile for purposes of minimizing your overall tax burden is not fraud but rather responsible life planning.

If a byproduct of this planning is you get to enjoy some of the benefits of a state that you are not domiciled in then all the better.

[GoneStreamin]

Originally Posted by nsbcpa

As a CPA with nearly 40 years of experience with multistate issues......I can assure the previous poster that establishing domicile for purposes of minimizing your overall tax burden is not fraud but rather responsible life planning.

If a byproduct of this planning is you get to enjoy some of the benefits of a state that you are not domiciled in then all the better.

Thanks for this response, it's very helpful and appreciated. As we won't be renting or owning property anywhere, just living in our Airstream, it's good to know we have options.

[airwoody]

You also asked about insurance. I have 30yrs experience (CA License)

I would check your current health coverage as most require you to live in the state for 6 months out of the year where you obtained coverage. Some carriers offer national PPO networks so that in network benefits can be applied while traveling.

You don't want a claim denied due to a residency issue.

[Shiny16]

Originally Posted by nsbcpa

As a CPA with nearly 40 years of experience with multistate issues......I can assure the previous poster that establishing domicile for purposes of minimizing your overall tax burden is not fraud but rather responsible life planning.

If a byproduct of this planning is you get to enjoy some of the benefits of a state that you are not domiciled in then all the better.

As it pertains to pammie's post I would say the California tax department would be in disagreement with you.
http://www.zillionforms.com/2003/P47410.PDF

[zapper]

Originally Posted by Shiny16

My parents taught me ethics and serving in the milatary does not give you the right to commit fraud.
Again if you honestly live in more then one state then by all means choose the cheaper one. To declare residency in a state you have no intention of living in solely for a tax advantage when you admit to living full time in another is dishonest and no different then wrongfully applying for welfare or food stamps. Do you honestly think it's fair that your boyfriend lives in and enjoys the benefits of California with out having to pay what other residents pay?
This thread was about advice on state residency. I think offering advice that is equal to committing fraud is bad advice and should be commented on.
If you don't see the ethical issue with your post. I'm sure others do. I'm sorry that makes you compelled to start name calling.
If your certain there is nothing wrong with your original post then forward it to the Ca state tax collector and see what the response is.

I think we have beat this one to death. Can we please move on?

[airwoody]

I would also make sure I had the Under/Un Insured motorist coverage equal to the liability - (you want to make sure you get as coverage as what you pay out to the other guy)

Also get the biggest Umbrella if its too low the insurance company will just pay it out and you are left to defend yourself on the remainder of the claim You can raise your deductible's so the additional protection will not cost you.

[VaTravelers]

Originally Posted by PammieSue

I have lived in CA since I was a child, I have two sons still living here and my Landlord and Lady and sons have become my family, so I will keep my little grannyhouse with the incredibly low rent. Temperatures and weather, mountains, desert, oceans, culture, San Diego had it all. I am a service connected Veteran and my income is nontaxible. I will admit that our vehicle registrations are very high, as is the general all around cost of living.

My boyfriend Chris keeps his Texas residency because his Veterans Retirement Income IS taxable, and registration for his Jeep and the Airstream are very low cost. We live together here in San Diego, and visit Texas once a year for the Airstream to be inspected for its re-registration.

I suggest researching all the states to find one that gives you the best financial deal, like Chris you can still live here part of your year.

I am a military veteran, I was not aware CA did not tax military retirement.

[VaTravelers]

Originally Posted by Shiny16

My parents taught me ethics and serving in the milatary does not give you the right to commit fraud.
Again if you honestly live in more then one state then by all means choose the cheaper one. To declare residency in a state you have no intention of living in solely for a tax advantage when you admit to living full time in another is dishonest and no different then wrongfully applying for welfare or food stamps. Do you honestly think it's fair that your boyfriend lives in and enjoys the benefits of California with out having to pay what other residents pay?
This thread was about advice on state residency. I think offering advice that is equal to committing fraud is bad advice and should be commented on.
If you don't see the ethical issue with your post. I'm sure others do. I'm sorry that makes you compelled to start name calling.
If your certain there is nothing wrong with your original post then forward it to the Ca state tax collector and see what the response is.

Shiny, I agree with your point, but I like to believe most of us recognize the ethical issue here and really didn't need you to point that out to us. My understanding is CA is pretty generous about giving away taxpayers money so what's the big deal about one person taking advantage of their generosity!

[SteveSueMac]

Originally Posted by VaTravelers

Shiny, I agree with your point, but I like to believe most of us recognize the ethical issue here and really didn't need you to point that out to us. My understanding is CA is pretty generous about giving away taxpayers money so what's the big deal about one person taking advantage of their generosity!

I'll start by acknowledging I shouldn't start...

Like everything - it's complicated and it depends.

Use taxes as an example - there's a thin line - a thin LEGAL line between tax avoidance and tax evasion. Financially, it's most cost effective and rational for me to legally avoid paying taxes whenever possible. Simple case in point - if you own a home and pay a mortgage, you want to deduct all allowable expenses (like interest payments on your mortgage, charitable contributions, etc.) from your income to bring the total taxable income down and pay less taxes.

Local, state, and federal agencies in the US all have complicated tax codes and allow many LEGAL loopholes that rationally, you want an adviser who can navigate those legal loopholes for your maximum advantage (i.e., minimal taxes).

If your adviser suggests - for example - lying about charitable deductions you never made just to dishonestly lower your tax burden - that's not avoidance, that's evasion.

The grey area is when a local, state, or federal opportunity lacks the kind of clarity that could unintentionally invite questionable ethics to take advantage of the lack of clarity. If a state says residency is defined by at least 6 months permanent residence in the state - obviously 0 days in the date that year wouldn't qualify. But how do you handle being in the state 5.5 months and say due to an accident you spent 3 extra weeks in a hospital outside the state? Still no ethical dilemma there - just a technicality to work out.

So - I haven't read CA's requirements and even if I had and was considering residency there, I'd seek a professional who knows the difference between the avoidance and evasion concepts and get close to the line but wouldn't cross it.

This completely leaves aside the additional ethical dilemma of my individual tax avoidance and the potentially negative impact that creates for the community in which I live. Local, state, and federal territories need roads, schools, infrastructure, etc. - what does it hurt if one person cheats on his/her taxes or through legal avoidance opportunities pays 30% less on their tax bill than another of equal income? Well - it's never the one case - it's the multiplication of the tens of thousands or maybe millions of "ones" that add up to the strain on society to function. And of course we can start looking at graft in government contracts and wag our finger at such shameful brazen theft of the people's funds and trust - but at the same time, thinking our one little "nibble" from such a big table isn't hurting anyone. The sad reality is that it all hurts.

Life itself is an ethical dilemma - but we're veering a bit off topic at that point [emoji3]

[3wd67rg]

Originally Posted by VaTravelers

I am a military veteran, I was not aware CA did not tax military retirement.

Unfortunately Veterans Retirement IS taxable. So you want your domicile to be a state with the lowest taxes, my boyfriend's home state of Texas is low tax.

Veterans Disability Income is NOT taxable, not by Federals or CA.

Since CA is my homestate and I have two sons here still, and the best living situation ever, we live half the year here, and half the year traveling, ending up in Texas for a few months. Except this year, I am going to have back surgery this year. We came to Idaho for a few weeks to see my daughter and family and will go home for that soon.

[3wd67rg]

Originally Posted by VaTravelers

I am a military veteran, I was not aware CA did not tax military retirement.

Unfortunately Veterans Retirement IS taxable. So you want your domicile to be a state with the lowest taxes.

Veterans Disability Income is NOT taxable, not by Federals or CA.

[McDave]

Following what SteveSueMack wrote, the great Supreme Court justice Learned Hand wrote in an opinion, "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." Most tax professionals have used his words to guide their morality as it comes to advising clients regarding the tax law. This morality posits that a taxpayer is not obligated to consider the effects on society or whether he is being fair to his friends and neighbors when he takes a tax position that reduces his taxes; those considerations are the job of the governmental body that passes the tax law. A taxpayer's sole consideration is whether he is honestly applying the letter of the tax law to the facts of his situation.

[SteveSueMac]

Thanks McDave - while Hand wasn't ever on the SCOTUS, he's considered one of the greats. This tax opinion is an excellent example. This is why I said it's complicated and depends. Legally, you could imagine there is almost an obligation for a citizen to take fullest advantage of the law to legally avoid (not evade) taxes wherever possible. I don't know the full context of the quote you shared, but that's the sense I get from the quick read. And that's true.

It's also true that for some, being part of something bigger than one's self carries a sense of obligation, maybe even gratitude, that suggests my advantage at the disadvantage of others isn't a good place to be. That doesn't make it right, or required, or better or worse - just is what it is.

In either case - the question of intentional evasion should be off the table. While one may not be obligated to do more than the minimum as a citizen, one can never justify intentionally doing less than that which is required.

One guy's $0.02 - your mileage can and should vary [emoji3]

[Mollysdad]

Originally Posted by SteveSueMac

Use taxes as an example - there's a thin line - a thin LEGAL line between tax avoidance and tax evasion.

Don't think there are any loopholes, there aren't. There is the law. Congress wrote the law in a convoluted way to make it possible to reward their friends and punish their enemies. That's why we'll never have a flat tax in our lifetimes.
So, If congress wrote a law to benefit Mr. A, and you happen to be Mr. B, you have the same right to apply the law as he does. Avoiding taxes is perfectly legal strategy, one practiced by everyone with wealth, even those publicly calling for higher taxes (which they won't pay) I remember the Greek shipping magnate, and husband of Jackie O, Aristotle Onassis, observing, "Never pay taxes and always use other people's money."
Remember, 50% of Americans pay no taxes. Legally.