How would my taxes be affected if: I currently reside in Texas... Want to move to Cali for 6-9 months and also work a 2nd job on the side in Cali. A) How would my trading taxes work..would I be paying for CA or TX? B) What are the rules on moving and paying taxes? C) Could I somehow appear as if I was still in TX to avoid the lofty CA taxes just for trading purposes but get away with paying the standard taxes from the part-time work?
Technically, any income earned in any state is liable for income taxes in that state. If you're going to be paid through a normal payroll system, it will deduct CA taxes (regardless of your permanent address), and you'll be required to file 2 state tax returns (TX & CA). If you're paid on the side (no W-4), then you can pretty much do whatever you want provided you have a permanent legal address in TX, however, legally any income derived from a state must be reported in that state. edit - ah trading taxes, I didn't see that at first. As long as you can legally prove that you resided in TX for at least half the year, you can file your trading income in TX.
Why would you want to move to CA? Everything is much more expensive here, you'll probably just neutralize your second income with the increase in living expenses. Save your energy and frustration and stay in TX. RoughTrader
How does my status as a resident change is basically what I am asking? If I leased a place in CA for 9-12 months...could I get away with not paying taxes on my trading in CA but still obviously take FICA/SS and all that jazz from my part-time paycheck?
RoughTrader- Not moving to CA for income purposes...if my income is neutralized, that is fine. My fiancee is working in CA and also I have a rare chance to work for the LA Lakers B-Ball Operations on a part time basis. Just trying to figure out what would happen to my taxes and how complicated it would get.
Don't switch residency or mailing address or account information on your accounts and you'll be fine. If you work in CA and file a W-2 you're going to get taxed though. Best thing is to just shack up with the girl, get as much ass as possible, and just stick to trading full time. When she kicks you out for being lazy, just beat it back to Texas. You know, rinse and repeat.....
How are you going to avoid this? The AGI is derived from Fed form. And I believe the CA Dept of Revenue have accessed to the fed info. This is my guess only.
(A) Generally the trading income or loss is allocated between the two states. If your residency actually changes (because you slept in CA 183+ nights) then you are a part-year CA resident and you follow those rules. If your residency stays in TX, then you might be a CA non-resident. In either case you file the CA 540NR return. (B) There is a moving expense deduction that can apply, there's also temporary job assignment and indefinite job assignment expense deductions for those who qualify. (C) "appear as if I was still in TX" Sure, if one wants to play games one can get creative. A good place to start though is not to post publicly your thoughts on getting away with tax evasion.
Face facts, it's the state taxes and only the state taxes that can be evaded in this case. Very doubtful that the Texas tax collectors would even care about this in the first place. Add the fact that you're most likely the "typical Elite Trader" (LOL) and the most you'd owe is about 1K. No tax collectors are going to waste their time on a small fish like this guy anyways.