Residency Question for State of California & Oregon

[Tax Prep by Deb]

I have a client who has lived in California for the past four years. In July of 2007 he moved to Oregon and accepted a job. His intent was to check things out in Oregon and if it didn't work out to move back to California which he did in November. He was in Oregon for 4 months. Do I file him has part year residence for California and part year residence for Oregon? Or I'm thinking that because of the short time he was gone that maybe I should just leave him a full year resident, treat his 4 months in Oregon as a temporary abscence, and therefor file his Oregon return as a non resident? Any ideas?

In case it makes a difference he did leave his job in California, worked at three different places in Oregon and then ended up coming back to California and was rehired at his old job. It just seems like to me that I should leave him as a full time resident in CA!

Thanks in advance,

Deb!

[jainen]

>>His intent was to check things out in Oregon and if it didn't work out to move back to California<<

I don't see any way to exclude the Oregon income from California taxation. Clearly he did not sever his California ties to establish a permanent residence in Oregon. There's lots of rulings about that. Technically Oregon could ALSO treat him as a resident for those four months, since he was in the state for an indefinite (as opposed to temporary) period. It wouldn't change the taxable income, though, so they won't bother with it. File CA resident and OR non-resident. Don't forget Schedule S.

[Tax Prep by Deb]

>>His intent was to check things out in Oregon and if it didn't work out to move back to California<<

I don't see any way to exclude the Oregon income from California taxation. Clearly he did not sever his California ties to establish a permanent residence in Oregon. There's lots of rulings about that. Technically Oregon could ALSO treat him as a resident for those four months, since he was in the state for an indefinite (as opposed to temporary) period. It wouldn't change the taxable income, though, so they won't bother with it. File CA resident and OR non-resident. Don't forget Schedule S.

Thanks Jainen,

That was how I was leaning as well. Tax consequence isn't significant, I just wanted to make sure I was thinking in the right direction. I would rather do it right the first time.l

Thanks again,

Deb!

[Tax Prep by Deb]

Jainen,

You mentioned a schedule S. I've tried to pull this up on CA side and I don't get anything. I also tried Oregon and I still don't see it. Can you be a little more specific?

Thanks!

Deb!

[BulldogTom]

Jainen might be confusing OR with UT. UT has a schedule S for non-residents to figure the credits I think. Just happened to run into this the other day with a client who worked in UT for part of the year.

The fact set is similar to yours except in UT. I am filing as a CA resident and a PY UT resident. Not sure that helps, I may be wrong, but that is how I am treating this client.

Tom

Lodi, CA

[Tax Prep by Deb]

Jainen might be confusing OR with UT. UT has a schedule S for non-residents to figure the credits I think. Just happened to run into this the other day with a client who worked in UT for part of the year.

The fact set is similar to yours except in UT. I am filing as a CA resident and a PY UT resident. Not sure that helps, I may be wrong, but that is how I am treating this client.

Tom

Lodi, CA

Actually BulldogTom,

I found the schedule Jainen was referring me to. It is a California form that allows me to take a credit against the taxes my client pays to Oregon for the same income taxed by California. It is California Schedule S

Take a look maybe it will help your client as well.

Deb!

[BulldogTom]

Actually BulldogTom,

I found the schedule Jainen was referring me to. It is a California form that allows me to take a credit against the taxes my client pays to Oregon for the same income taxed by California. It is California Schedule S

Take a look maybe it will help your client as well.

Deb!

Thanks, I will.

Tom

Lodi, CA

[Tax Prep by Deb]

BulldogTom,

I just did some quick research and it appears that this form is used if the other state doesn't allow a credit for the double taxed income. Oregon does so I'm going to request it from Oregon. Perhaps you should check on Utah. The way I read the instructions for this form is that it's only if the other state doesn't allow a credit.

If you get a chance to review it, please let me know what you think?

Thanks,

Deb!

[BulldogTom]

BulldogTom,

I just did some quick research and it appears that this form is used if the other state doesn't allow a credit for the double taxed income. Oregon does so I'm going to request it from Oregon. Perhaps you should check on Utah. The way I read the instructions for this form is that it's only if the other state doesn't allow a credit.

If you get a chance to review it, please let me know what you think?

Thanks,

Deb!

Deb,

I will. I was just thinking through the possibilities of which state would be most beneficial to take a credit. I will look at the CA form and the UT form tonight and see if there is a way to manipulate the credit to the advantage of the employee.

Tom

Lodi, CA

[jainen]

>>which state would be most beneficial to take a credit<<

Sorry, you don't get a choice. In most cases you take the other state credit on the resident return, but Deb is correct that for Oregon you take it on the non-resident return. My mistake.

[Tax Prep by Deb]

>>which state would be most beneficial to take a credit<<

Sorry, you don't get a choice. In most cases you take the other state credit on the resident return, but Deb is correct that for Oregon you take it on the non-resident return. My mistake.

Thanks Jainen,

It really helps to bounce ideas off each other like this. That's why no matter what happens to ATX this site will always be of extreme importance to me. I respect your opinions and others. It's comforting to know that after you do the research you can always learn more and share with others!

Deb!

[catax]

It is important to remember Sch S because it is a form that ATX does not automatically pull up. I think it should pull the form up automatically but it doesn't. Nena