Goodbye California & High Taxes! Hello Residency Audit?
6th February 2020
Californians like to complain about high taxes, and who can blame them? California may have more millionaires and billionaires, but the tax cost of living in the Golden State has always been high. The current top 13.3% rate—which is the same on ordinary income and capital gain—dates from 2012. But with the 2018 federal tax law changes, paying 13.3% in non-deductible state taxes (after a $10,000 cap) is even more painful. The tax law is causing an exodus of high-tax state residents to no tax or lower tax states. Lower tax means just about everywhere.
If you aren’t careful, though about how you do it, you could end up leaving California and yet being asked to keep paying California taxes. There’s also the fact that California has a very broad reach into other states. In some cases, California can assess taxes no matter where you live. Should this discourage you? Not hardly, but it pays to know what you are up against in a fight. If you live in California, you probably know how aggressive California’s state tax agency can be. In fact, even if you live somewhere else, you might have heard of the Golden State’s aggressive tax rules.
You can check out any time you like, but you can never leave.