Leaving California: How to Truly Become a Non-Resident and Costly Mistakes to Avoid
California has one of the most aggressive residency audit programs in the country. While many taxpayers dream of leaving the Golden State to reduce their tax burden, changing California residency is far more complex than simply moving to another state. At Velin & Associates, Inc., we regularly advise high-income professionals, business owners, creators, and investors who are surprised to learn that California may still consider them residents—even after they “move.”
The reality is this: California residency is determined by facts and circumstances, not by intention alone. If you don’t make a clean, well-documented break, the Franchise Tax Board (FTB) can—and often will—challenge your non-resident status.
California Residency vs. Non-Residency: Why It’s So Hard to Change
California does not rely on a single test to determine residency. Instead, it looks at your entire lifestyle, including:
- Where you live
- Where you work
- Where your family lives
- Where you spend your time
- Where your economic and social ties exist
Even if you spend fewer than 183 days in California, you can still be considered a resident if California remains the “center of your life.”
At Velin & Associates, we explain this to clients early because many assume that days alone determine residency. They do not.
What You Must Do to Truly Become a California Non-Resident
To successfully change residency, you must relocate and re-establish your life elsewhere—not simply add a second address.
1. Establish a Real Home in the New State
The new residence must be legitimate and comparable to your California home.
Best practice includes:
- Purchasing or leasing a home of similar size, cost, and amenities
- Spending the majority of your time there
- Moving personal belongings, vehicles, and pets
📌 Example:
A high-net-worth client moved from Los Angeles to Nevada but rented a small apartment while keeping a luxury home in California. During an FTB audit, California argued the Nevada residence was temporary. We advised the client to purchase a primary residence in Nevada and sell the California home to solidify non-residency.
2. Sever Employment and Business Ties With California
If you continue earning income tied to California, your residency claim weakens.
This is especially important for:
- CPA for YouTubers
- CPA for TikTokers
- CPA for Filmmakers
- CPA for Online Commerce and Amazon sellers
📌 Example:
An Amazon Business CPA client moved to Texas but continued managing a California-based LLC and warehouse. The FTB argued the client was still actively engaged in California business. We helped restructure operations and shift management to Texas to support non-residency.
3. Build New Social, Professional, and Community Ties
The FTB looks at where your life actually happens.
You should:
- Register to vote in the new state
- Obtain a new driver’s license
- Register vehicles there
- Join local organizations
- Establish relationships with local doctors, dentists, and CPAs
📌 Example:
A Dentist CPA client relocated to Arizona but continued seeing California physicians and dentists. During audit preparation, we advised transitioning medical care immediately to Arizona to reduce California ties.
4. Track Your Time Meticulously
Every day spent in California counts—and the FTB will calculate it.
Auditors may review:
- Credit card transactions
- Cell phone location data
- Airline records
- Social media activity
- Bank withdrawals
- Toll road usage
📌 Important Warning:
Spending extended time visiting family, children, or friends in California can undo your residency claim.
What NOT to Do When Trying to Leave California
Many taxpayers unintentionally sabotage their non-residency claim. Common mistakes include:
- Keeping the California home and letting children live there
- Maintaining California employment or active businesses
- Enrolling children in California schools
- Voting in California elections
- Receiving mail at a California address
- Spending excessive time in California
- Continuing to use California-based professionals requiring in-person visits
📌 Velin & Associates Insight:
We’ve seen residency audits triggered simply because mail was still being sent to a California address—even after the taxpayer “moved.”
Residency Audits: What the FTB Looks for First
When a taxpayer files a part-year resident return with significant income earned after leaving California, audits often follow.
The FTB will:
- Compare days spent in California vs. the new state
- Review bank accounts and credit card activity
- Analyze 1099s, W-2s, and business income
- Check property ownership across states
- Review social media (Facebook, LinkedIn, Instagram)
📌 Example:
A CPA for Doctors client posted frequent Instagram updates from California while claiming Texas residency. The FTB used these posts as supporting evidence in an audit. We helped mitigate exposure, but the audit was costly and time-consuming.
Why Planning Matters More Than Tax Savings
Even if you ultimately win a residency audit, the legal, accounting, and emotional costs can be significant. Poor planning can wipe out expected tax savings.
At Velin & Associates, we advise clients to:
- Plan residency changes 6–12 months in advance
- Document every step
- Make the break visible, permanent, and defensible
This is especially critical for:
- CPA for High Net Worth Individuals
- CPA for Medical Practice owners
- CPA for Shopify Store and Online Commerce
- CPA for Creators and Filmmakers
How Velin & Associates Helps Clients Change Residency Correctly
We don’t just prepare tax returns—we help clients strategically restructure their lives and businesses to withstand scrutiny.
Our services include:
- Residency and domicile planning
- Audit defense and documentation
- Multi-state tax compliance
- Business restructuring for non-residency
- Advisory for creators, doctors, dentists, and online sellers
Final Thoughts: Make the Break Clean—or Don’t Make It at All
Leaving California for tax purposes is possible—but only if done correctly. Half-measures invite audits, penalties, and stress.
If you’re considering a move, plan first, move second, file last.
📞 Ready to Plan Your California Exit the Right Way?
For more information about our tax planning services, contact us today: visit our website.
Velin & Associates, Inc
8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org
CPA for YouTubers | CPA for Shopify Store | CPA for Online Commerce | CPA for Creators | Shopify Store CPA | CPA for Filmmakers | CPA for Amazon Business | Amazon Business CPA | CPA for Dental Practice | Dentist CPA | Dental Business CPA | CPA for TikTokers | CPA for Doctors | CPA for Medical Practice | CPA for High Net Worth Individuals
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.