California Non-resident

[bardon]

I have a client that moved from California in 2006, but still owns a rental property (shows a loss). All her other income is not from California. She has not been back to California since 2006.

Is ALL her income (interest, dividends, capital gains, etc.) taxable under California law? I understand that certain interest and dividends can be subtracted, but none of her income falls under that catagory.

Your help is appreciated.

Thanks,

Bardon

[JRS]

From California Frtanchise Tax Board's website:

I did not live in California. Do I have to file a return?

You are required to file a Nonresident or Part-Year Resident Income Tax Return (Long of Short Form 540NR) with California if you have income from California sources, such as, rental income, income from the sale of property, or partnership income in 2007 and you are:

Single with a total income from all sources of $13,713 or more

Married with joint income from all sources of $27,426 or more

[bardon]

From California Frtanchise Tax Board's website:

I did not live in California. Do I have to file a return?

You are required to file a Nonresident or Part-Year Resident Income Tax Return (Long of Short Form 540NR) with California if you have income from California sources, such as, rental income, income from the sale of property, or partnership income in 2007 and you are:

Single with a total income from all sources of $13,713 or more

Married with joint income from all sources of $27,426 or more

I understand a tax form is needed, but I want to know if ALL her non resident income is taxable, or can it be apportioned?

Bardon

[jainen]

>>I want to know if ALL her non resident income is taxable, or can it be apportioned?<<

Like other states, California requires a non-resident to report ALL her world-wide income and calculate the potential tax on that. Then it takes the percentage of the whole tax that is represented by the California source income. Since she has only a net loss from the rental, she will probably not owe any California tax. The only really tricky part is that the rental loss must be refigured using California law. That's probably the same anyway, but there could be differences in depreciation or other expenses.

p.s. California is pretty aggressive about enforcing residency rules. Since she still owns real estate in California, you should help her document that she is in fact no longer residing or domiciled in California. Just being a resident of another state is not nearly enough proof for that purpose.