Who are Residents and Nonresidents of California?
California classifies individuals as either residents or nonresidents for tax purposes, which determines how income is taxed and which forms must be filed. The classification depends on your physical presence and intent to remain in California.
Resident Status
A resident of California is someone who:
- Was physically present in California for more than 184 days during the tax year, OR
- Had a permanent home in California and intended to return there, even if absent for part of the year.
Residents are taxed on their worldwide income, meaning all income from all sources, including income earned outside California, is subject to California state income tax.
Nonresident Status
A nonresident is someone who:
- Was not a resident of California for the entire tax year, and
- Did not have a permanent home in California or did not intend to return there.
Nonresidents are taxed only on income that is sourced from California. This includes wages earned while working in California, rental income from California property, and other income generated within the state.
Filing Requirements
Residents must file a California tax return if their gross income or adjusted gross income exceeds the thresholds specified for their filing status, age, and number of dependents.
Nonresidents must file if they have any income from California sources and their gross income or adjusted gross income exceeds the applicable thresholds.
Part-Year Residents
If you changed your residency status during the year (e.g., moved to or from California), you are considered a part-year resident. You must compute your income and deductions separately for the periods you were a resident and nonresident.
- For the period you were a resident: Use resident rules (taxable on worldwide income).
- For the period you were a nonresident: Use nonresident rules (taxable only on California-sourced income).
Important Notes
- California uses the "physical presence" test and "intent to remain" to determine residency.
- Part-year residents must complete Form 540NR or Form 540 with Schedule CA (540) to report income appropriately.
- Passive income (e.g., rental income, dividends) must be reported separately for resident and nonresident periods if applicable.
Source:
FTB Publication 1031 - Guidelines for Determining Resident Status
FTB Publication 1100 - Taxation of Nonresidents and Individuals Who Change Residency
Form 540NR - California Nonresident or Part-Year Resident Income Tax Return
Form 3801 - Instructions for Part-Year Residents
Schedule CA (540) - Instructions for California Adjustments
Disclaimer: Always verify with official Federal or State Department of Revenue Forms and Instructions for the most accurate and up-to-date information.