California Preparers

[WhiteOleander]

Client was resident of Calif. until Feb. 08. He retired from his job and moved to Texas. He has permanately moved from CA. The employer continued his pay for the entire year. 30,000. The W-2 shows state wages for 30,000.

Does t/p owe CA on the entire 30,000 since he was only a part year resident and received most of the income after he left? I have no idea why the employer didn't adjust the w-2 before filing. Will CA accept a stmt explaining the difference?

Thanks.

[DTS]

Ca

I don't believe so. Get the dates he moved out of CA and the number of days spend here in '08 and fill out Form CA-NR. By doing this, income will be allocated to CA only for the few months he was here.

Also, I was advised some time ago to make sure all of our clients that move out of CA change all addresses, bank accts, etc. to show the state they are NOT a resident of CA any longer.

D

[WhiteOleander]

I can allocate ok. But, I'm concerned that if the W-2 shwos 30,000 to CA, they will want tax on that amount.

I guess we'll just fight them about that if they send a letter.

Thanks

[Lion]

Where did he work?

Did he continue to work for them in TX? If all the wages were due to his services in CA, such as paying him for back vacation, sick pay, bonuses, etc., then it could be all taxable to CA. Here in CT I face that with NY from time to time.

[S T]

Calif

I would also have the question, as I just know California will ask or at least seek income tax on this amount.

You say the t/p retired, however, the employer is still paying income and withholding Ca state tax. Seems like a severance package or come type of agreed compensation package that possibly was earned in California. Just the payout was not lump sum but spread over months for the convenience of the employer.

With the State of Calif being in the financial position they are right now, you would have to have a pretty clear representation of "why" this income is not subject to Calif tax. I do not believe it will follow the retirement/pension income rules.



Sandy

[WhiteOleander]

Thanks,
I believe it was a "type" of severance pay. He did not contiue to work in CA or TX. Maybe it was indeed something that had accrued over time and the employer wanted to pay it out ratably to make the hit easier on him. (the employer) I'll have to get more info from the t/p. He may have to pay tax on all of it.