# California State Tax for US citizen living abroad



## taxmeplease (8 mo ago)

FY2022

0 days stayed in USA
No home (primary or secondary) in USA
US citizen
No employment in USA
Acquired driver license outside USA (but California DL is still valid, hasn't expired)

Above are some basic facts. 

Question:
Do I need to file CA state tax for FY2022?

Clearly, I am not a resident of CA and have no intention of staying there. I have permanently moved out of USA. The only sticking point is that my California driver license is still valid (has not expired yet, and not cancelled). I am just letting it expire on its own. Any real experience here, anyone? Do I need to inform FTB about this or just skip filing CA tax for 2022? 

Appreciate any practical suggestions or experience.


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## ARPC (Aug 30, 2021)

I stopped filing in CA when I stopped using my address there. But the first year I lived abroad I was still using a US bank account with my CA address, so I did file there that year, as it was my old address that a couple of insurance payments and my covid payments had gone to. Not sure that’s helpful but it sounds like you’re all good.


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## taxmeplease (8 mo ago)

That is a good point. I do have a US bank account, including a brokerage account, which use my previous outdated US address. I no longer live at that address since end of FY2021, so shall not concern FTB, but I don't know. You raise an interesting point though, may be I shall consider changing those to an international address. Thank you.


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## Bevdeforges (Nov 16, 2007)

Simply having a still-valid driver's license should not make you subject to CA state income taxes. Neither should just having a bank account with a CA address - though that may depend on a variety of factors, including how much is in the account and how much income the account generates.

OTOH, changing a bank or brokerage account to a non-US address may result in the financial institution closing the account. You plays the game and you takes your chances.


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## taxmeplease (8 mo ago)

Most large institutions in US support international address on the accounts, at least that is what I have been told by couple of them I called. So I doubt they will close these accounts outright, although, these accounts may become restricted when they are marked "international" on address change and that is something I shall inquire further about I guess.

If FTB is looking at bank income, then interest income won't be much at their current tiny interest rate.
If FTB is looking at capital gains in the brokerage account, that amount may vary depending on buy/sale activity of the account for individual. 

But I am not sure if I can tell for sure that having an account with invalid/outdated CA address, will still trigger state tax. That would seem pretty outrageous but FTB is outrageous so hoping for the best.


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## tomwins (Dec 27, 2014)

I strongly urge you to look into changing the address on your accounts just to avoid any difficulty. You might read: https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf which is guidance on determining California tax residency. 
Safe Harbor may apply to you if you don't return:
Safe harbor is available for certain individuals leaving
California under employment-related contracts. The safe
harbor provides that an individual domiciled in California
who is outside California under an employment-related
contract for an uninterrupted period of at least 546
consecutive days will be considered a nonresident unless
any of the following is met:
• The individual has intangible income exceeding
$200,000 in any taxable year during which the
employment-related contract is in effect.
• The principal purpose of the absence from California is
to avoid personal income tax. 

But the best thing to do is review and "be on the right side of" each of the following:

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.


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## 255 (Sep 8, 2018)

@taxmeplease -- @tomwins has given some good poop. It's de rigueur to file a "Part-year" state tax return when leaving a State: https://www.ftb.ca.gov/file/personal/residency-status/part-year-and-nonresident.html , along with changing your address on all accounts. Most states it's not a big issue, but CA is one of the few states that "will track you down" for their opinion of a perceived debt of a few shekels. So ideally, if you filed a part-year CA return for 2021, you should be able to safely, not file a return for 2022 (but I'd recommend expeditiously changing your address out of CA on everything.) I have personally dealt with the wrath of CA trying to claim that a now non-resident was still a resident -- it's not that hard to eliminate any CA nexus.

@Bevdeforges statement about the closure of bank/brokerage accounts or restrictions is a real thing. I had this happen to me and the solution was to contract with mail forwarding firm, in a no tax state, and change the address of all my official correspondence, including banks and brokerages -- problem solved. I also changed my voter registration to my "new" state and eventually got a U.S. drivers license, in the new state (when I visited a few years later, exchanging my old DL.) Cheers, 255


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## tomwins (Dec 27, 2014)

I changed my residency from California to Florida and have used a mail forwarding service for seven years. I've just changed it to a company that will scan any mail I get, deposit checks if I get them, will forward mail I need to any address worldwide. So far, I'm much happier with this service than the one I had been using. I get an email of the envelop of the letter and I can decide what to do with it (scan, shred, or forward).

Taxmeplease, to summarize:
1. Get rid of your CA license (since you aren't using it). Use this form to "forfeit" your CA license: https://www.dmv.ca.gov/portal/uploads/2020/05/dl142-1.pdf
2. Change your address with your financial institutions to outside of California. I am using my mail-forwarding service as my address.
3. File a partial year tax return in California if you didn't for tax year 2021.
4. Also, you didn't mention it but if you are registered to vote you should change your voter registration to another state. I am preparing to move to Spain and the Registrar of Voters Office in Tallahassee told me to use their address on the form to establish my district. Then they will send me a ballot via email. I can then fax it back to them.
5. Look over the other items in msg #6 to see if you have any other ties to California.


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## Bevdeforges (Nov 16, 2007)

Way back when they first established the right for overseas Americans to vote in the last state they were resident in before leaving the US, they supposedly formalized the principle that only being registered to vote in a state does not constitute residence there. You may want to contact the US expat group AARO if you have concerns (they were very involved in the initial campaign to allow for voter registration for overseas residents). Voting

You may simple want to consider re-registering to vote from overseas (whether in California or whatever state your last residence address was). Or you can contact FVAP: Americans can vote. Wherever they are.


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## taxmeplease (8 mo ago)

@tomwins @255 Interesting details on mail-forwarding & part-year return.
1. Yes, good point. I had been thinking about it. But now that you bring up this, I believe I will go ahead with intentionally forfeiting the license.
2. This is the tricky one. Are these mail forwarding services reliable, in the sense, they will open the mail, which might have confidential info. If not, I might just provide overseas address on the account, if banks do insist they will not close down the account.
3. Filed 2021, will skip 2022 (on-going determination..).
4. Not registered to vote yet with any state
5. "The origination point of your financial transactions". Is this the IP address of country where the transaction originated, do you guys know? So if I do a wire-transfer from USA to outside-of-USA, but the origin of the transaction happened from outside-of-USA over the login into account over internet, I believe that would count as non-resident? Although bank will be able to provide that proof, if they maintain an audit of such requests for whatever statue of limitation is, or I can proactively acquire this info from bank and keep for my record.

One basic question:

If I determine that I am not a resident, do I simply NOT file the return, or if I will need to inform FTB that "I am not a resident and will not be filing a return for the year" by sending a letter of sorts?

thank you guys, it has been pretty helpful !


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## 255 (Sep 8, 2018)

@taxmeplease -- I currently have two mail forwarding services, for personal mail, one in WA (that I've had for almost 30 years) and a relatively new one in Florida. My original one keeps my mail and only sends it out when I request it. My Florida service scans all my mail, as part of my fee, and asks if I want it forwarded or shred. Supposedly, I am supposed to pay for any forwarding, over $1.00, but so far, everything has been forwarded, gratis. Maybe because I'm older, I have zero concerns with my mail being opened, scanned and shredded. I have developed a relationship with the owners of both businesses. Most firms give you an option to open/scan or just hold and forward -- your choice. I've had no issues in nearly 30 years using these type of services. I also have utilized two firms situationally in NV, two in WY, and one in BC, Canada, in the past. Just an aside, the business in WA has gone through three owners since I've been a client! I also currently have business mail forwarding services in WY & FL. The Florida firm is the same outfit I use for my personal mail.

I historically operate all my U.S. finances as if from the U.S., since I initially had bank/brokerage issues, when I lived in South America. I have heard of others having an IP address issue; I have never had a problem. There have been other members, of this forum, that have had issues that were reportedly solved with using a VPN.

If you determine you are not a resident of CA -- there is no need to file a tax return. If they contact you asking about your return, you just need to provide "proof" that you are not a CA resident. Cheers, 255


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## taxmeplease (8 mo ago)

@255 Thank you for giving me sufficient details about the mail forwarding, very helpful. 

Good to know about filing process. Thanks much, appreciate all the suggestions from everyone ! Feels good to know that there are other people in the same boat and have overcome the wrench thrown from FTB. Regards.


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## nrlaurin (May 8, 2020)

tomwins said:


> I changed my residency from California to Florida and have used a mail forwarding service for seven years. I've just changed it to a company that will scan any mail I get, deposit checks if I get them, will forward mail I need to any address worldwide. So far, I'm much happier with this service than the one I had been using. I get an email of the envelop of the letter and I can decide what to do with it (scan, shred, or forward).
> 
> Taxmeplease, to summarize:
> 1. Get rid of your CA license (since you aren't using it). Use this form to "forfeit" your CA license: https://www.dmv.ca.gov/portal/uploads/2020/05/dl142-1.pdf
> ...


what mail forwarding service are you using now?


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## DonAndAbby (Jan 7, 2013)

nrlaurin said:


> what mail forwarding service are you using now?


I use Travelling Mailbox with a Florida address. They are good but you might want to browse some others for the one that fits your needs. The key is how much mail you get and and if you want it opened and scanned. Some offer a low monthly fee but are very expensive for opening and scanning. I pay $19.95 a month that includes up to 35 page scans.

I hardly get any physical mail now because you can do everything online with banks, etc. IRS is one that still sends mail.


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## DonAndAbby (Jan 7, 2013)

taxmeplease said:


> @255 Thank you for giving me sufficient details about the mail forwarding, very helpful.
> 
> Good to know about filing process. Thanks much, appreciate all the suggestions from everyone ! Feels good to know that there are other people in the same boat and have overcome the wrench thrown from FTB. Regards.


From my experience with California. I have not lived there since 2003.

When I moved overseas in 2012 I thought it would be ok to use my sister's California address for mail, which included banks and brokerage with small amount of taxable interest.

California is very aggressive and I think "robots" are scanning data looking for potential tax revenue, justified or not. I think there typically a two year lag before they contact you. For instance, I received a letter for 2013 tax year in 2015. In the letter they send, if you want to protest, you have X time to respond. How to protest is all laid out in the letter.

They are a big mess. Three times they have sent me letters for different tax years and three times I have returned the protest, reminding them of what I told them for the previous years. They don't care. It is all computerized.

I changed my address for everything to Travelling Mailbox in Florida. So far, so good.

So my advice is what you are doing. Don't file a 2022 California return if you did not live there at all during 2022. In 2024 the bots might send you a letter claiming you owe CA taxes. Just submit the protest and say you don't live in California along with any other pertinent info.


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## taxmeplease (8 mo ago)

@DonAndAbby Ah, so even banks generating minimal interest income, having a CA address on file, are also under scanner. Thanks for mentioning about the 'protest' aspect of state taxation. So basically, I will go into a wait-and-watch cycle after FY2022 tax season is over  You are also right that banks usually send no snail mails these days, which is great, as may not have to sign up for scanning of papers with mailbox. With my IRS online account, I am able to see notices online. 

My current action plan based on you guys suggestions:
===
a. Hire a CA in USA (sounds like I shall shell out some money and have a formal discussion). Might help me in a future-protest.
b. Change my address to international address with FTB & IRS (done with my FY2021 filing).
c. Forfeit CA DL. (sent paperwork).
d. Bank account which are issuing interest, change address to international address (done). 
e. Change address on life insurance to international one (done).
f. Signup for a US mailbox. (thanks you guys for some suggestions).
g. Brokerage accounts which have some stocks, change address to a US-mailbox address. (Still debating if I shall use US-mailbox or my international-address). Speaking with these firms over phone. Unfortunately, most of the customer reps don't understand the complexity involved, so are unable to guide. I spoke to a senior associate, and she has escalated it to someone else, waiting for their response.
h. Change address on credit cards to be my international address (done). They are still working, so good. 
i. Catch some sleep.

This thread is turning out to be an eye-opener for me and may be others in future would find it useful, if they ever moved out of CA.


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## DonAndAbby (Jan 7, 2013)

*See below.*



taxmeplease said:


> @DonAndAbby Ah, so even banks generating minimal interest income, having a CA address on file, are also under scanner.
> *Yes, the trigger for my 2015 return was exactly this:*
> *New York Life interest: $27
> Fidelity Interest $20
> ...


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## 255 (Sep 8, 2018)

@taxmeplease -- I concur with all that @DonAndAbby posted. Please be aware that there have been a few posters, on this forum, that contacted their banks/brokerage firms, were told everything was OK to use an international address and then were later froze out (on a routine compliance sweep.)

My wife and I eventually took a "vacation" to Florida, exchanged our driver's license for a FL DL, opened a FL bank account, filed a "Declaration of Domicile" with the county clerk where we previously contracted for a mail forwarding service, licensed our U.S. vehicle and registered to vote. This is de rigueur for the RV community where FL, SD & TX all have thriving businesses that support travelers. I'll file a part-year tax return for 2021 (currently on extension.) Cheers, 255


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## DonAndAbby (Jan 7, 2013)

255 said:


> My wife and I eventually took a "vacation" to Florida, exchanged our driver's license for a FL DL, opened a FL bank account, filed a "Declaration of Domicile" with the county clerk where we previously contracted for a mail forwarding service, licensed our U.S. vehicle and registered to vote. This is de rigueur for the RV community where FL, SD & TX all have thriving businesses that support travelers. I'll file a part-year tax return for 2021 (currently on extension.) Cheers, 255


Sorry, off topic....
@255 
Do you think I could get a Florida driver's license if I visited and if so what would they ask for? My situation is:
Resident of FL 2003-2006
Owned a house in Broward County 2003-2020. Rented it from 2006 to 2020 when I sold it.
Had a FL drivers license and registered to vote in Broward. Not sure when the FL driver's license expired.
Moved to Germany in 2006 and had German DL. 
Moved to Kentucky in 2010 and got Kentucky DL. Expired in 2015.
Moved to Philippines in 2012. Philippines DL is the only one now.
Maintained voter registration in Broward and voted in the 2020 election.
Have my U.S mailing address in Orlando.

We might be moving to the U.S. in 2023 or 2024. Having a U.S. DL ahead of then would be beneficial for me in regards to reestablishing domicile for the move back to the U.S. I might be making a trip over before we move.


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## 255 (Sep 8, 2018)

@DonAndAbby -- Your question: "Do you think I could get a Florida driver's license if I visited and if so what would they ask for?" Yes, that's what we did. Since you've lived in the US. last, the "Real ID" laws have taken effect: U.S. Citizen . We presented our U.S. passports, our SS Cards along with our cell phone, automobile insurance bills, copies of last years 1099-Rs, and our checking account statements (we had already changed these accounts to our Florida address, in anticipation of our trip.) Look at the list and pick what you can provide. In the end, they didn't accept everything for my wife, so she had to sign an attestation form. In our case, we were exchanging our old AZ licenses (still current,) but if you need a new license, you'll need to take the driver's tests you did when you were 16 (unless you want to "exchange" your Philippine's license, even if you could. If I were you, I'd take both your old FL DL and your current DL (to avoid Driver's Ed.) There is also a Traffic Law and Substance Abuse (TLSAE) course that FL requires -- it can be done online: What is Traffic Law and Substance Abuse Education (TLSAE) and how do I find the approved listing of TLSAE course providers? . We were exempt, since we were exchanging licenses. You can also register to vote, when you get your license (changing from Broward to Orange County.) Cheers, 255


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## DonAndAbby (Jan 7, 2013)

@255 Thanks! Great info! If things work out I might make it there this year.


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## taxmeplease (8 mo ago)

Thanks @DonAndAbby for the detailed feedback. I have a related question.

If I do change addresses to a US-mailbox, that is treated purely as a correspondence address, and does not define residency, correct? Residency would still be calculated based on US-customs timestamps on passports, so would still end up filing a 1040NR and not 1040? 

@255 That is a good point. It is possible that a future compliance impacts these accounts, that slight hint was given by one of the executive I talked to at E-trade. You also mention about initiating a DL, Domicile, Bank account in FL, is that mainly for your personal needs or is that tied to taxation somehow? I understood the mailbox point, but are you saying having those other items besides just mailbox is a good thing to convince tax authorities? Thanks.


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## 255 (Sep 8, 2018)

@taxmeplease -- Everything I mentioned was to establish domicile (and right now residency too.) Having a U.S. address of convenience for banks/brokerage accounts does not affect residency overseas for tax purposes. This was tested in the courts a couple of decades ago. I routinely used my old WA mail forwarding service for my IRS address, when I lived in South America. The IRS did ask the question, one year, but I just responded with my local address and my IRS Form 2555 was accepted.

There is no law barring banks/brokerage firms from offering services to international clients -- they primarily just make a business decision not to take on the additional compliance costs.

The establishment of domicile/residency in a no tax state effectively puts the kybosh on any claims from your old high tax state. Technically, you can have multiple residencies, but only one domicile. Also residency is not the same as fiscal (tax) residency. You can also have multiple citizenships. Americans have citizenship based taxation, whereas most countries have a fiscal residency based taxation -- so Americans pay taxes wherever they live and also in the country they are living. In resent years, the IRS wants you to have a fiscal residence somewhere if you make claims for the FEIE or the FTC -- this has affected digital nomads.

Additionally, you can have residence in one state and still be required to file a "non-resident" tax return in another state. Since you are a U.S. citizen, you will always file the 1040, unless you give-up your U.S. citizenship and have business in the U.S. requiring a 1040-NR (this form is not for U.S. citizens.)

Your old state of CA is one of the more aggressive states in trying to claw back income from ex-residents. Basically, you are trying to tell a story that will convince the CA tax authority that you have moved-on. States change their rules too (just like countries.) WA will not allow a driver's license to a person that does not have a physical abode in WA -- mail forwarding firms just won't cut-it -- whereas FL will. Cheers, 255


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## DonAndAbby (Jan 7, 2013)

taxmeplease said:


> If I do change addresses to a US-mailbox, that is treated purely as a correspondence address, and does not define residency, correct? Residency would still be calculated based on US-customs timestamps on passports, so would still end up filing a 1040NR and not 1040?


@255 covered most of your questions. I am not a tax pro, but a U.S. citizen does not use 1040 NR. That is for non-citizens, non-resident aliens.

Residency can be defined differently by different states, government agencies, etc., so you have to make sure and dig up the requirements for the purpose.

FYI, after using my CPA for the last 9 year or so, I filed 2021 taxes using OLT, which is one of the free software packages the IRS recommends. It asks for foreign and mailing addresses, and does the taxes accordingly. Unfortunately, U.S. citizens living overseas don't get some of the full tax breaks. I have two kids and if I were living in the U.S., the child tax credits are fully refundable. Living overseas, the credits are only up the amount of tax you owe. Luckily it didn't cost me much. I'm planning better for 2022.


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## Bevdeforges (Nov 16, 2007)

DonAndAbby said:


> Residency can be defined differently by different states, government agencies, etc., so you have to make sure and dig up the requirements for the purpose.


That, indeed, is the "sticking point" - As far as the US is concerned, you are ALWAYS "tax resident" in the US as long as you are a US citizen or holding a Green Card. The states pretty much all have their own rules - but one thing to try with states like California is to file a NR (non-resident) return for at least the part-year when you leave the state. (Officially you need to leave with no intention of returning, but how you prove that is up to you.) Not all states have NR forms, but it's worth looking into. If they "accept" your NR final declaration without comment or objection, you've got that much better a case to argue non-residence. 

And probably best to check into the requirements for exchanging or re-licensing for your driver's license in whatever country you're headed for. Even if you'll have to take the driving tests in your new home, taking a local license is another big step toward asserting your non-residence in the old state.


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## taxmeplease (8 mo ago)

@255 @DonAndAbby @Bevdeforges Very informative, thank you. I was under the impression to file 1040NR based on simply the fact that I am not physically present in US. So it will be 1040 then, which is easier to file using Turbotax or OLT (as @DonAndAbby mentioned).

I already filed FY2021 with IRS & FTB CA. However, I moved out of US on Dec 3rd of that year, does it make sense to amend at least the CA one to mark it part-time Jan1-Dec3 and non-resident from Dec 4-31? Or shall I simply skip filing FY2022 for CA next year. It sounds like it would be valuable to claim non-residency in FY2021 even for part of the year, so FY2022 would go smooth? 

Thank you.


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## 255 (Sep 8, 2018)

@taxmeplease -- In your case, there are a few options. I looked at the CA website and don't see an easy way to change from form 540 to 540NR. The easiest option is to just leave well enough alone and respond if California questions why you didn't file a 2022 return.

I guess, if it was me, I'd probably file an amended CA tax return: https://www.ftb.ca.gov/forms/Search/Home/FormRequest/4865 , using my new Florida mailing address -- zeroing out the return. When you request the form, just tell them you left CA on 3 Dec, and filed the wrong form. Next I'd file a new 540NR: https://www.ftb.ca.gov/forms/2021/2021-540nr.pdf , also using my new FL address. You may or may not get any penalty for late filing (if you didn't already file an extension request.)

No need to amend your federal return, the numbers should be the same. I would change your address with the IRS utilizing form 8822: https://www.irs.gov/pub/irs-pdf/f8822.pdf
, again using your new FL address. The IRS does have an information sharing agreement with California -- so this would definitely help changing your address with them. Cheers, 255


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