San Francisco, CA asked in Tax Law for California

Q: Do I still pay California income tax if I move to Washington state during pandemic since everyone is remote working?

My company (everything is digital since it's a marketing company) is HQ'd in California but has remote employees in most states. I am moving from CA to Washington state soon to be with family since everyone at my company will be working remote until the pandemic is close over (perhaps longer if we allow long-term remote working).

i don't have a California drivers license, but recently registered to vote. i don't own any property in CA either.

I have lived in CA for 1 year. I heard the CA FTB is quite aggressive about pursuing income taxes, but assuming I 1) change my voter registration and 2) actually move to WA. i won't have to pay CA income tax right?

follow-up question: let's say a magic wand vaccine shows up in 6 months, there's no more pandemic, and my company asks me to move back to California. Will I be still required to pay taxes for the 6 month period I was gone from CA? (I read there was a CA 7% minimum but I'm confused about how that applies).

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1 Lawyer Answer
Maurice Mandel II
Maurice Mandel II
  • Newport Beach, CA
  • Licensed in California

A: This will create a difficult tax situation for you, and you should hire an accountant to handle your tax returns. First, there is the issue of state income tax. You only pay income tax to one state but you may have 2 states claiming it. The state where the income is earned is the state with the right to the tax. So if you are working remotely from WA, and the state income tax is less there, you may want to claim that WA is entitled to the tax, BUT your employer will most likely deduct and pay CA state income tax. You will need to claim a refund and file a WA tax return. This same analysis goes for your state employment taxes- employee share. The company will probably deduct CA and you will have to go through a maze of forms to get it back and to pay WA. You might be able to avoid all this is you are self employed, and live in WA. If your employer will go for that.

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