California Non-Resident Safe Harbor

So you’ve lived in California for years, and you’re now working outside of the state for an extended period of time, and you wonder how that affects your residency status.

Turns out that there is a special statutory provision for many in your circumstances. California R & TC Section 17014 provides that a taxpayer is considered a nonresident if he or she:

  • is outside of California for at least 546 consecutive days under an employment-related contract (which would be best if it were written)
  • spends no more than 45 days in California; and
  • derives less than $200,000 in intangible income (dividends, interest, etc.) in taxable years in which the employment-related contract is in effect.

A spouse is also considered a nonresident if accompanying the spouse meeting the tests. But if a taxpayer (and spouse) does not meet the 546 day test, and the others, they may or may not qualify as nonresidents, depending on the facts and circumstances prevailing in the given case, and based on their intention at the time of their departure. It can get murky.