Sam Brotman, JD, LLM, MBA March 3, 2021 13 min read

Establishing Residency or Domicile in California Can Be Taxing


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law

Robert Wood, tax expert and frequent contributor to, wrote that “many would-be former Californians have unrealistic expectations about establishing residency in a new state. They may have a hard time distancing themselves from California, and they may not plan on California tax authorities pursuing them.” 

Because of the high tax rate in the Golden State, there are many – especially high-income earners – who wish to distance themselves yet can’t quite do so. What should you know before making the move from California?

That the burden of proof falls on your shoulders to demonstrate that you are no longer a Californian. You could leave the state and still have to pay its taxes. The California Department of Tax and Fee Administration (“CDTFA”) and the California Franchise Tax Board  (“FTB”) have very long shadows.

Knowing the background information about the meaning and application of residency and domicile in California is a start in the right direction, as knowledge is power. Although these topics seem straightforward, their history and enforcement have evolved and may continue to do so over time.

California first defined a “resident” in 1935 when it established its revenue code. At the same time, the FTB also established the definition of “domicile” through an administrative code.

As first understood, residency was viewed as physically living in California or having a physical presence in California for at least six months. Domicile was viewed as where a taxpayer chose to have their physical home and required the important element of intent. There is not much decisional case law on residency or domicile, so we will review a couple of primary cases.

Over time, the concept of domicile has remained pretty consistent. The California cases of Chapman v. Superior Court of Los Angeles County, Whittell v. Franchise Tax Bd., and Noble v. Franchise Tax Bd. sum up the present case law status of domicile in California. In Whittell, the Court of Appeals for the First District held that a taxpayer may have several residences for different purposes including tax, but only one domicile. (See Whittell v. Franchise Tax Bd., 231 Cal. App. 2d 278 (1964)).

In Chapman, the Court of Appeals for the Second District held that domicile depends on intent, and that intent should be evaluated by someone’s actions. (See Chapman v. Superior Court of Los Angeles County, (1958) 162 Cal. App. 2d 421, 426). In Noble, the Court of Appeals for the Second District used the two cases above and held that objective acts showing intent are to be used to determine both residency and domicile.

However, the concept of being a resident for tax purposes has been adjusted over time. Today, RTC §1704(a)(2) defines a resident as somebody who is typically domiciled in the state or who is outside the state for either temporary or transitory purposes.

Guidance Questions of Facts

There is not much case law on residency, and it is often evaluated under administrative standards by the Franchise Tax Board. The FTB looks at principles from the statute such as the state the taxpayer has their “closest connection” as well as the “identifiable purpose” of the taxpayer’s location during the year.

These concepts along with the Bragg factors listed previously, serve as the best guidance on the present status of understanding residency in a legal sense.

It is important to remember that the FTB views both residency and domicile as questions of facts. Intention can be proven with details such as where your spouse and children reside and where you have bank accounts. Any religious and professional affiliations also weigh in.

Traveling extensively will not change the location of your domicile, even if you rarely occupy its space. Indeed, if you have investments in California or do business here, you will most likely have contact with state tax entities.

The California State Board of Equalization (“SBE”), like the CDTFA and the FTB, is a public agency that assists with tax administration and fee collection. The SBE was a contributor to FTB Publication 1031 on 2020 Guidelines for Determining Resident Status.

Under the Publication, “a resident is any individual who meets any of the following:

  • Present in California for other than a temporary or transitory purpose.
  • Domiciled in California, but outside California for a temporary or transitory purpose.”

Under Section G of FTB Publication 1031, “the underlying theory of residency is that [the taxpayer] is a resident of the place where [they] have the closest connections.” The guidelines say that the taxpayer should compare their ties to California with their ties elsewhere. “In using these factors, it is the strength of your ties, not just the number of ties, that determines your residency.”

Some of the factors for consideration are, time, location of spouse and children, location of principal residence, and state that issued your driver’s license.

In a note for the 2020 guidelines, the FTB says that, “if you are impacted by the COVID-19 pandemic, it is one of the factors we will consider as we apply the general rules for residency and income sourcing.”

Temporary or Transitory Purposes

In regard to “temporary or transitory” purposes, “any individual who is a resident of California continues to be a resident when absent from the state for a temporary or transitory purpose.” It goes on to say, “an absence from California under an employment-related contract for a period of at least 546 consecutive days may be considered an absence for other than a temporary or transitory purpose.” 

The publication gives examples of how they would rule. In one such example, the taxpayer who resided in California considered himself to be a resident of Nevada because of the months spent living there in a summer home.

Simply living in Nevada for several months does not establish residency, so the taxpayer would therefore keep their status as a resident of California.

In another example, a taxpayer accepts a 16-month-long position with a company in Spain. The taxpayer’s family continues to reside in their home in California while the taxpayer rents an apartment in Madrid for the duration of the job. Because this is a temporary position, the taxpayer is still considered to be a California resident. 

In another example, the taxpayer accepts a permanent position for the company in Spain in May 2020. He sells his California home and moves his family overseas. In the following tax year, they will be considered part-year residents. Through May 4, 2020, they were California residents. On May 5, 2020, they became nonresidents. 

What About Domicile?

As for the meaning of domicile, the publication states it is not the same thing as residency. Although some states consider them the same, California does not.

In California law, “domicile is defined for tax purposes as the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment.”

The publication continues: “you can have only one domicile at a time. Once you acquire a domicile, you retain that domicile until you acquire another. A change of domicile requires all of the following:

  • Abandonment of your prior domicile.
  • Physically moving to and residing in the new locality.
  • Intent to remain in the new locality permanently or indefinitely as demonstrated by your actions.” 

State tax liabilities can often be difficult to surmount and need I say it – expensive! In these cases, a good tax attorney can help convince California that you don’t actually live here and therefore should not pay state taxes.

Give Brotman Law a call. We have extensive experience dealing with the FTB as well as the SBE and can assist you with the legal side of establishing your residency and domicile.  

"Sam is a wonderful, results-oriented and extremely knowledgeable and talented attorney, who really has 'heart' in working on behalf of his clients, and explains options in a straightforward, respectful manner. He has assisted us with great outcomes which have added to our quality of life. I would not hesitate to recommend Sam for his services as he is an ethical, personable and expert attorney in his field. You will likely not be disappointed with Sam's work ethic, approach and his efforts."

-Aileen Dwight, Licensed Clinical Social Worker & Psychotherapist

Last updated: June 8, 2024

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Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law



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