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I'm a California resident and I'm moving out of state to the East Coast for a new job which is a 2-year contract. I'll most likely end up in California again after the said two years.

Do I have to make sure to get rid of California licence plates and driver's licence, or risk being double-taxed on my state income taxes? (I don't own any real estate property, in California or elsewhere; and I plan to file as a part-year resident for the year in which I relocate to the East Coast.)

Note that this question is not whether you can be in another state without getting a licence plate in said state, (which might be illegal in said other state according to other state's law); but is about whether you can have a California licence plate in another state without being a California resident, and being subject to California income tax when not living in California and not physically working there.

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    Have you contacted or looked at the web site for the DMV RMV(?) of the new state? It will tell you how long you can reside with no state registration.
    – JTP - Apologise to Monica ♦
    Commented Jun 22, 2013 at 16:26
  • @JoeTaxpayer, you're talking about something that I've explicitly said this question is not concerned about; for whether you can be in another state without registering your car there, there's another related question, money.stackexchange.com/questions/22988/…
    – cnst
    Commented Jun 23, 2013 at 19:40
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    This has nothing to do with personal finance or money.
    – DJClayworth
    Commented Jun 24, 2013 at 2:48
  • @DJClayworth why? He's asking about state income tax residency rules
    – littleadv
    Commented Jun 24, 2013 at 4:25
  • I'll permit this to remain open on the taxation angle. I made the title reflect the tax nature of this question, because on the surface, the question in the title did seem off-topic.
    – Chris W. Rea
    Commented Jun 25, 2013 at 13:23

2 Answers 2

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Do I have to make sure to get rid of California licence plates and driver's licence, or risk being double-taxed on my state income taxes?

You should ask a California licensed CPA with experience fighting the Franchise Tax Board (FTB) on residency matters. But in my unprofessional opinion - yes.

The FTB considers voting registration, car registration and driver license as signs of domicile, so keeping these in CA would suggest that CA is your domicile. California taxes world-wide income, so you would have to pay CA taxes while on the East Coast.

See this FTB publication on residency, especially the chapters talking about temporary absence, connection ties, etc. Good read.

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  • Thanks for the link, it mentions that car registration is only one of the factors to consider when determining residency, and that different factors could have different weight. I think those whole rules and factors are quite outdated: who changes their bank accounts when moving between states? I didn't change my account from my prior state to California, and now I'm moving outside of California, and I also don't have a driver's licence in California; have I never actually been a resident of the state?
    – cnst
    Commented Jun 23, 2013 at 19:45
  • Also, in regards to clubs: most computer-related clubs are in California; does it effectively mean that a software engineer cannot become a non-resident, once they acquire resident status in California?
    – cnst
    Commented Jun 23, 2013 at 19:46
  • There is, apparently, a safe-harbour provision, for temporary moves outside of California for at least 546 consecutive days, and spending less than 45 days in a given year in California. Not sure how that'll work out... :/
    – cnst
    Commented Jun 23, 2013 at 19:47
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    @cnst Regarding the rules being outdated, I can only think of this quote from the court of appeals in a tax case: "Some people believe with great fervor preposterous things that just happen to coincide with their self-interest. “Tax protesters” have convinced themselves that wages are not income, that only gold is money, that the Sixteenth Amendment is unconstitutional, and so on. These beliefs all lead—so tax protesters think—to the elimination of their obligation to pay taxes." While thinking the residency rules seem outdated is not nutty, be careful because every state wants to get paid.
    – Paul
    Commented Jun 27, 2013 at 8:19
  • The quote can be found at bulk.resource.org/courts.gov/c/F2/791/…
    – Paul
    Commented Jun 27, 2013 at 8:21
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Assume two states, one with high tax and one with low taxes. In order to convince the states that you have moved from one to the other you must change as many things as you can: register your car, send your bills to the new address, register to vote, move your bank accounts, pay personal property tax.

Some of these things are quick and inexpensive, some are costly because there are fees and taxes involved. The more you "move" to the new state the more convincing the argument.

This answer, as you requested, doesn't address what the new state will require you to do, or forbid you to keep doing.

Based on your comment I decided to expand my answer. Both states want their money. The old state might view the incomplete move as not good enough. The new state might say you did enough for us to consider you a resident, but hit you with fines for not doing everything that was required.

Examples: some Jurisdictions will tow a car with out of state plates that consistently parks overnight for more than 30 days. They patrol apartment complexes looking for violators. They will hit you with failing to register, failure to get the car inspected, and driving a car that is not properly insured, plus failure to pay the car tax.

Your desire to not fully move may not convince the states.

My advice: Move. Do everything the new state requires by their deadlines. If the job doesn't workout then move someplace else.

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  • As mentioned, the other state is on the east coast, so it'll be hard for them to make the argument that I'm still living in Cali, when I don't have any residential or business addresses there, other than, perhaps, continuing to rent a PO Box. The other state is Indiana. I do myself regard the move as temporary, the contract is for at most 2 years, and if I don't like it, I might be done with it even sooner than that. However, I've heard stories of people moving to Oregon or, perhaps, even WA, and getting some tax issues with continuing to have a CA driver's licence. Is east coast easier?
    – cnst
    Commented Jun 22, 2013 at 15:59
  • California knows you were a resident before you moved. You still want to keep a PO BOX and the car registered, they might demand proof.
    – mhoran_psprep
    Commented Jun 22, 2013 at 23:09
  • I think I'll open-up a PO Box in that other state, renew the old CA one for one more year, and then do a forwarding from the old one, to the new one, and then in reverse when I go back. :-)
    – cnst
    Commented Jun 28, 2013 at 18:24

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