FILING STATUS

[HOPE2]

Hi and thanks in advance.

My client lives with son all the year in CA and one spouse moved to Seattle middle of June 2022 for 4 years medical residency. What is the status of who is in Washington? And how about the rest of family in CA? Also who is in Seattle has 2 w-2s from CA and Seattle.

[taxes96786]

Have you read the 1040 instructions?

[itonewbie]

Sounds to me CA remains the spouse's domicile and the spouse will, therefore, continue to be liable for CA tax during the 4 years of residency.

The spouse could possibly qualify for the safe harbor to be considered nonresident (so long as the days of presence in CA are carefully manage and the amount of intangible income doesn't cross the threshold) but there'll be another hurdle to overcome, which is over filing status because CA generally follows that of the federal return.

This will be a problem if your client has CA-source income, such as wages, that would be allocable to the spouse since the exception for using a different filing status mandates, inter alia, that the nonresident spouse must not have any CA-source income during the tax year.

[Skylane]

Not enough details and glad you’re not shouting… If both are legal CA residents (dr licenses, voting, tax home) then follow the w2s. CA resident and WA non res. Not really familiar with state rules on the left coast but that’s basically how it should work.

Or, if spouse in WA spouse establishes residency in WA, then, they could file MFJ federal, and each file their own respective state returns. You’d have to check each states rules for filing status.

[HOPE2]

Thanks for your insight. The spouse who is in Washigton has 2 W-2s, one from CA the other from WA.

W-2 from WA does not have state part as you know and around $33000, the other one from CA is around $15000 when spouse was in CA ( from job site before moving WA, from JAN till July first) I considered residency of WA for her as non-resident, but on her w-2 in state part; CA pupped up and I can not remove it. Also, on CA return in spite of mentioning non-resident in work info, allocation income has not been appeared. So I am confused and need a help. I am challenging to find out for family status or each of spouses.

Thanks again for any help.

[BobKamman]

I would not assume that the doctor intends to return to California.  I mean, how many people who have left California for Washington intend to come back?  

I thought the question was whether the spouse in CA could file HOH.  That's an interesting question. 

Since both states are community property, CA still can probably tax at least half the WA income.  

[itonewbie]

You need to first determine the domicile of the spouse and your client because that will drive everything else.

On what basis do you consider the spouse to be a nonresident of WA?  It is more likely that he falls within the statutory definition of tax resident (which doesn't go by day count).  Even if he continues to be a CA domicile doesn't automatically mean that he will be nonresident of another state.

In terms of allocation on the return, going back to the points I raised in my initial response, you really need to first figure out the domicile status of both spouses, the residency positions, and the optimal filing status.  We can go back to discussing the input and mechanics afterward.

[HOPE2]

Appreciate it. I think WA spouse should be resident of CA and because of medical residency stays in WA. 

If it is ok so far, since WA does not have state return, how do I enter the part of state for a W-2 which spouse got it from WA since CA pupped up in there and asks me employer number and state withhold but W-2 is from WA not CA. I wanted to remove it, but Proseries does not allow me.

[BobKamman]

Why do you think WA spouse should be a resident of CA?  Have you actually talked to the doctor?  Who is your client here, just the CA spouse, or both of them?  

[HOPE2]

Thanks, what is your idea to find it out?

[BobKamman]

It always helps to talk to the client.  And ask if he has a WA drivers license and vehicle registration.  And whether it's worth sending thousands a year to Sacramento just for the privilege of being called a Golden Stater.  

Also, was there a prenup that takes the WA income out of community property?  It's bad enough that half the WA income will probably get taxed by CA anyway.  

[abctax55]

@taxes96786 

Have you read the 1040 instructions?

Do you post this crap just to ???  ( I don't know- gather thumbs up some way?)

1040 instructions have NO INFO on state issues, and neither does Pub 17 by the way.  

The OP is asking about CA & Washington.

[HOPE2]

Has driver license from WA. 

[itonewbie]

@BobKamman, if the spouse is a domicile resident of CA, the way out is to take advantage of the safe harbor, which is well-established, but CA days need to be managed and then there's the hurdle of filing status that may need to be overcome, depending on how the numbers play out.  There's no lack of rulings against folks who attempted to terminate residency without satisfying all the conditions.

[BobKamman]

The first step is to rule out CA as domicile.  Physical presence in WA is given.  But is there intent to stay?  Ask the client, or get sued for malpractice when someone else starts asking the right questions.  

[itonewbie]

That's what we already have the OP ask. Nothing new here.

[BobKamman]

@abctax55 With a couple of other recent posts involving HoH, my first thought was that was what was involved here, also.  But answers off the top of the head, usually just result in dandruff.  Don't let them get your dander up.  

[taxes96786]

Oops...my bad...I meant read the State instructions

[HOPE2]

I think this the most interesting question so far here. Still I am not able to find the answer.

Question: One SPOUSE lived in CA FROM 1/1/2022 till 06/27/2022 with a w-2 from CA

and as of 06/28/2022 till end of the year lived in WA has a W-2 from WA as you know dose not have state withhold, also has WA DRIVER LICENSE and rented a condo lives WA FOR 4 YEARS RESIDENCY (TO BE DOCTOR)

The other spouse with son lived all the year in CA. SO FAR EVERYTHING IS CLEAR.

I read 1040 and all publication related for finding my answer. Since I did not find my answer I am here to get a help.

When I enter W-2 from WA, Proseries thinks it is from CA, and State box pups CA and I can not remove it. Can I consider W-2 of WA for income CA? If it is, how about employer number? Surely has to pay tax to CA.

1-What is the status of this family?

2- or what is the status of the spouse in WA?

3- and what is the status of the spouse with son in CA? 

Do you have any insight based on my post?

Thanks a lot

[itonewbie]

We have asked you to confirm the domicile of both your client and the spouse but you have not given us a response.

Your client and her son having lived in CA all year only tells us they are statutory residents but NOT where their domicile is.

We also give you pointers on the key considerations and planning ideas.  We could point you in the right direction but you may not necessarily get step-by-step instructions from us (neither should you rely on what strangers here tell you).

Do come back when you have the answer.

[HOPE2]

Thanks itonewbie. I already mentioned that domicile for one Spouse and son is CA. They lived in CA and they rented home in CA it means resident of CA. About another Spouse I already mentioned the dates and its moving out and in dates. I do not know what of your question remained without answer. Let me know please. 

Thanks for your help.

[itonewbie]

You have mistaken statutory residency with domicile.  Those are two totally different legal concepts.

Like I said in my last response, what you told us about your client and her son is that they are statutory residents of CA but that does not indicate in any sense their domicile is also CA.

Yes, you also gave us the spouse's date of relocation.  Again, that is no indication of his domicile.

Suggest you look into these again and come back to us with what you find out.

[HOPE2]

You will be presumed to be a California resident for any taxable year in which you spend more than nine months in this state so as I told husband and son were in California for all year of 2022 and still they are and the were in CA for past years.

About of the other one who supposed to be in WA for years to be a doctor, I do not know to be honest what you need to find out her domicile.

Again I really appreciate it to help me.

[itonewbie]

With all due respect, if you don't care to understand what domicile is and get the answers from your client, this discussion is going nowhere.

Since you seem to have quoted that from either a CA publication or instructions from probably 540, you may want to search for the term "domicile" in that same source, I'm sure you'll have a hit.

[BobKamman]

Whether the one in California is domiciled or just a resident, is irrelevant.  The one you should be concerned about is the one in Washington.  Maybe the word residency is confusing.  A medical residency, after graduation from medical school, is a job.  Did she even go to medical school in California?  What is their intention during and after residency?  Californians move to Washington soon?  Entire family reunites in some other state? I would question whether the one in Washington can be considered as domiciled in California, even if she wants to be.  But it is not in her interest to do that, absent special circumstances.  And that's what all this revolves around, is a lot of facts and circumstances.  It's not just a data-entry problem.  

[HOPE2]

Thanks for your help. I am sure the one with son are resident of California. About the other one in WA, it is very clear, when I asked her, do you want to be there after 4 years and family join to you live in WA, or want to back CA? Said, I do not know depends on the job. We can not think about 4 years later. based on my explanation if you need something else let me know otherwise I would like to find out how is going to be their filing status.

[HOPE2]

Thanks. CA is the one with his son's domicile. Everybody has one domicile. What else should I tell to find my answer. 

[itonewbie]

And the domicile of your client and her spouse?

[BobKamman]

It's absurd to even be considering the WA spouse as having a California domicile.  It's also not in their best financial interest.  

[itonewbie]

If supported by facts, it would be.  And that takes planning.  If only facts can be changed retrospectively...

[HOPE2]

Thanks but I already answered. 

Son and father are in CA as of many years ago and still they are living in CA. Their domicile is CA.

Mom was in CA till middle of June 2022 and had a job in CA with a W-2 from CA. Then she went to WA for four years residency to be a specialist. Also she works in hospital and got a w-2 from WA's hospital may back to CA and join rest family and hire in Kaisr or wherever depends on which one would be the best for her.

I think I answered all your question. My problem is for WA's w-2  and filing status.

Thanks

[IRonMaN]

30 posts later and no closer to satisfaction.  As Sonny and Cher used to sing - and the beat goes on, the beat goes on.

[itonewbie]

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@IRonMaN wrote:

30 posts later and no closer to satisfaction.  As Sonny and Cher used to sing - and the beat goes on, the beat goes on.

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I give up.  The OP doesn't want to dance to the music.  We can continue to play Sonny and Cher in loops like we're trapped in an elevator - I think I'll go mad. 🙄

[HOPE2]

As I told , it is the very complicated and hard to find the answer even on FTB BOOKLET or whenever. Do not give up and help me to find the direction. 

Thanks

[abctax55]

Jensen & Bob are telling you that yes, this is very complicated.  And pointing out that you are missing a very important component of the equation.  Heed their advice and research the definition of domicile. 

[HOPE2]

 Forget about my question. Proseries dose not have an area for entering part resident for one of a firmly like wife  or husband, if you know where it is really appreciate it. This is my question.

[BobKamman]

The medical residency is the work in the hospital.  File a federal joint return; IRS doesn't care what state the income was earned.  File a California 540NR, reporting all of the CA income for both, and half the WA income for the spouse who moved there, because it is community income.  Or refer them to someone who can.  

[HOPE2]

Thanks, Now I am in the right road.

540NR for all family, husband, wife and son? But husband and son were all the year in CA only wife has had  partly resident CA and WA. And husband had income son was a student in college with a 1098-T in 2022

[BobKamman]

The son is a full-year California resident so files a 540.  His parents' domicile has nothing to do with how he files.