Guidelines for Determining (Tax) Residency

California is a “high-tax” state. Therefore, for state tax law purposes, it may be advantageous to be considered a resident of another state. Nevada for example. Well, recently, this issue has come up again in my practice. The question is generally the same: What are the guidelines for determining residency in California for state tax law purposes. The answer is generally the same: “it depends.”

Guidelines for Determining Residency

The underlying theory of residency is that you are a resident of the place where you have the “closest connections.”

The following list shows some of the factors you can use to help determine your residency status. Since your residence is usually the place where you have the closest ties, you should compare your ties to California with your ties elsewhere. In using these factors, it is the strength of your ties, not just the number of ties, that determines your residency. This is only a partial list of the factors to consider. No one factor is determinative. Consider all the facts of your particular situation to determine your residency status.

Factors to consider are as follows:

• Amount of time you spend in California versus amount of time you spend outside California.

• Location of your spouse/RDP and children.

• Location of your principal residence.

• State that issued your driver’s license.

• State where your vehicles are registered.

• State where you maintain your professional licenses.

• State where you are registered to vote.

• Location of the banks where you maintain accounts.

• The origination point of your financial transactions.

• Location of your medical professionals and other healthcare providers (doctors, dentists etc.),

accountants, and attorneys.

• Location of your social ties, such as your place of worship, professional associations, or social and

country clubs of which you are a member.

• Location of your real property and investments.

• Permanence of your work assignments in California.