[siberianbear]

(I am not a lawyer, this is not legal advice)

I left California for Nevada many years ago, and I subsequently sold stock I accumulated while in California without paying state income tax.

It is legal and you can do it, but there are a lot of legal hurdles. They're pretty well documented around page 5 of FTB 1031 [1].

In my case, I quit my W2 job in California, entered into a contract to lease a home in NV, got rid of all leased or owned real estate in CA, sold or re-titled all motor vehicles from CA, registered to vote in NV, surrendered my CA driver license for a new NV license, re-titled all my financial accounts at my new address, got a NV phone number, etc.

This was all easy because I was single without children. If my situation was more complicated, like I had a spouse or ex-spouse with children enrolled in CA schools, or decided to retain owned real estate in CA, the situation can quickly fall into a gray zone.

If you have a W2 job in CA while claiming you're in NV, it's very hard to escape the CA FTB.

CA is very aggressive about chasing down its former residents. It's important to check all the boxes to get them from chasing you.

After I left, I filed non-resident CA returns for three years basically saying, "I had income but I am not a resident and it was not from a CA source, therefore I owe no CA tax." This is important because it starts the statute of limitations running. If you don't file, the statute of limitations doesn't start.

And while I'm writing all this: what in the world is up with a 13.3% state tax bracket? Screw California.

[1] https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf

[jrsj]

Those high brackets really only apply to people that are making a lot of money. I make $100k right now and my state tax in California would be nearly the same as it is in Ohio at that rate. That being said, with my work being remote indefinitely I’m going to Texas to save over $400 a month in tax (and cost of living is about the same — very low).

[uberduper]

I guess your case was extra special. I remained employed by the same company after moving from CA to AZ and the FTB never bothered me. The year I relocated, I filed my.. 540? after determining what income I earned while living in CA. And that was that. No issues with my options or RSUs either. Being married and having a child was also a non-issue.

[siberianbear]

If you're married or have children AND they come with you to AZ, that's obviously no problem. In that case, it works in your favor: it's just more data that you're a bona fide AZ resident. I was pointing out that if your children stay in CA while you go to NV, it works against you.

And AZ isn't NV. The FTB pays special attention to NV in particular because it has no income tax. Someone who moves to AZ isn't so obviously trying to skirt CA state income tax.

My case was a little special because I sold a lot of stock right after leaving CA, which makes it a little suspicious to the FTB.

[tradertef]

Thank you for this. Very useful for someone considering moving out :)