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Old 12-02-2011, 03:57 PM   #1
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Full time timing

Me and wife are Californians and plan to retire and go full timing in December of 2014. I know I need to ask a tax expert, but I would still like to ask others for advice or their experiences. Our last day of work will be around 12/15/14 and my final retirement date will be in the middle January of 2015. We are planning to domicile in South Dakota.

#1. When should I set up domicile and mailing service?

#2. We are going to purchase a new/used Moho around November of 2013. Can I avoid paying California sales tax on purchase?

#3. I will be cashing out vacation and should get the check in January of 2015. Will I have to pay California State income tax on the money if I am already domiciled in SD?

Again, just picking brains, not asking legal advice.

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Old 12-02-2011, 05:39 PM   #2
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We set up our mail forwarding about a month before we were ready to hit the road. We started sending out change of address notices soon after that. We actually ended up having mail forwarded from SD back to our old home address before we left. We also left a mail forwarding request at our old post office before we hit the road.

Once we had our address set up, we started the ball rolling to transfer our vehicle registrations. This can take time if you have a loan on the vehicle because the lien holder, who also holds the title from your old state, must send the title to SD to be replaced by a new title.

We couldn't get driver licenses ahead of time because you have to show up in person for an eye test and photo.

We considered the day we hit the road to be the end of our residency in our old state (PA) and the end of our tax liability there. There never has been a question from PA, but some states are more aggressive in trying to continue to collect taxes.

I am not familiar with CA tax laws, so I won't comment on your sales and income tax questions except to say I am doubtful you can easily escape paying in CA.
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Old 12-02-2011, 06:04 PM   #3
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We'll I'm no tax expert but having spent many years in CA I know they're really aggressive on getting their taxes. If you get a check from any work done while resident in CA, even if you get it at a later date, you'll need to pay CA taxes. If you get a MH while still CA resident you'll need to pay CA taxes.

Your best bet with CA is to be really clear when you break residency and your best bet on avoiding CA sales tax is to buy the MH out of state when you've already broken residency.

We broke residency when we had nothing left in CA that could tie us to the state...no checks, no work, no property etc. Even with being very meticulous (and informing both CA state and DMV of our change) they tried to come after us for registration fees and taxes a year later. It took me 6 months to resolve and we didn't need to pay, but what a mess!

Just my 2 cents anyhow..
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Old 12-02-2011, 06:09 PM   #4
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The way I understand it is: If you purchase the motor home in CA, you will pay CA sales tax since you will still be residing in that state. For income tax puroses, you will be getting this money paid from your employer in CA for vacation you earned in CA so it will be taxed in CA. In 2015 you will need to file income tax for both states. The CA will be prorated. I would definately seek a tax consultant for advice.
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Old 12-03-2011, 09:36 AM   #5
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Money earned in CA will be taxed.

My thoughts on sales tax's are to try to obtain an RV on a rent with option to buy basis, and after retirement and residence change, opt for the option.

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Old 12-03-2011, 01:38 PM   #6
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1. I would set up mail forwarding address 30 to 90 days before you retire.

2. If you purchase an RV outside of the state of CA and keep it outside of the state for one full year, even if you are a CA resident, you will not owe CA sales taxes on it. You will need to have some kind of proof that the RV remained outside of the state such as a storage receipt, certified letter, etc.

Here is the way the CA law is written:

"The ‘one-year resident' rule requires a vehicle purchaser who is a California resident to take delivery of the vehicle outside of California and use (or use and store) the vehicle outside of California for the first twelve months following purchase before being able to register it in California without paying use/sales tax."

3. You will be able to stop CA from getting state taxes from your retirement check for the rest of your life starting with the first check since you will already be SD residents the day you drive out of the state. It is doubtful you can protect that payout check amount from CA state taxes, but you may want to do more research.
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Old 12-03-2011, 05:32 PM   #7
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Thanks for all the comments and input. I wish I was already full timing it, but I am sure I will need the next 3 years to research and prepare for FTing.

Thanks
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Old 12-03-2011, 07:22 PM   #8
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Quote:
Originally Posted by smack2020 View Post
Thanks for all the comments and input. I wish I was already full timing it, but I am sure I will need the next 3 years to research and prepare for FTing.

Thanks
Scott
It's not too early to start your inquiries and planning. We started planning fairly seriously 3 or 4 years ahead of time. We researched RVs, read books and blogs, followed forums, etc. The shift to full-timing can be done more quickly, but when you know you did your homework ahead of time, you will be able to make decisions with more confidence.

Best wishes.
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Old 12-05-2011, 04:54 PM   #9
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I had my mail forwarding service about 2 months ahead of time. I got a temporary registration for the 3500 Chevy in NY state. I drove it to Kansas and picked up my 5er and it had a temporary registration. I went to SD and registered them and got my drivers license too. I use My Home Address for mail. 411 N. 6th St. Emery,SD 57332. They are in a small town and the vehicle insurance is lower if you "garage" in a small town as opposed to Sioux Falls.

By getting temporary registrations, I did not pay 8.5% sales tax in either NY or KS. I paid SD excise tax of 3% and saved over $5,000.00 right out the gate.

Most mail forwarding services will register vehicles for you if you send them the money to do it.
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Old 12-11-2011, 08:50 PM   #10
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Having done this back in 2002, I have some answers:

#1. When should I set up domicile and mailing service?
We set up our mailing service 6 months before we "defected" from CA. This allows you to make sure you have all addresses changed such as credit cards, SSI, Mediscare, retirement checks, banking, etc and everything is working correctly.

When you do retire, go to SD and apply for your driver's license, change banking, and register to vote. For logistic purposes, it is easier to do this if you retire n the middle of the year and not have to do everything at the beginning or the end of the year

#2. We are going to purchase a new/used Moho around November of 2013. Can I avoid paying California sales tax on purchase?

This can be touchy. If you buy a coach while a resident of CA, the only way you can not pay sales tax to CA is to take out of state delivery. I suggest you read BOE PUB 52 for the correct information on the length of time out of state and reporting requirements.

CAUTION: DO NOT CONTACT THE DMV FOR INFORMATION CONCERNING OUT OF STATE DELIVERY. They are a collection agency only and do not know anything about how the BOE handles taxes. They will treat you like a criminal and threaten you if you ask questions so stay away. In this case the bOE is your friend and will give you good info.

If you do purchase in CA and are able to keep it out of state for the required length of time, you will still have to pay 3% to SD. If you are going to be a full timer, I suggest you contact Bennett Law Services in Montana to get the straight info concerning a LLC.

If you wait until you are a SD resident, before you trade/buy, you will only pay taxes on the difference between your trade in and the cost of the new rig.

#3. I will be cashing out vacation and should get the check in January of 2015. Will I have to pay California State income tax on the money if I am already domiciled in SD?

If you retire in 2014 and already a SD resident, you will not have to pay CA tax on your January 2015 check. CA will try to collect but there is no legal right for you to pay taxes on that check. CA tried that with us and it took 3 years before they finally quit hassling us. Our accountant wrote CA letters for 2 years and on the 3rd year, I wrote CA and told them that I was being harassed and I would file suit if I received another letter. That is the reason you need to get your money transferred to a SD bank. We still owned CA property but that is still ok as it doesn't make any difference where you own property

Again, just picking brains, not asking legal advice.
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Old 12-13-2011, 01:32 PM   #11
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If you earned the income in California even if you're a resident of another state, you owe California tax on the amount. Don't believe me? Call the FTB and ask them.

http://www.ftb.ca.gov/forms/misc/1100.pdf

http://www.ftb.ca.gov/forms/2009/09_1031.pdf

Sue <---- former resident of CA
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Old 12-13-2011, 03:25 PM   #12
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Thanks, more stuff for me to research. Definitely sounds tricky.
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Old 12-13-2011, 04:02 PM   #13
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Also, if you own stock options, the following document will help:

http://www.ftb.ca.gov/forms/misc/1004.pdf

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Old 12-13-2011, 05:51 PM   #14
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Quote:
Originally Posted by saydiver View Post
If you earned the income in California even if you're a resident of another state, you owe California tax on the amount. Don't believe me? Call the FTB and ask them.

http://www.ftb.ca.gov/forms/misc/1100.pdf

http://www.ftb.ca.gov/forms/2009/09_1031.pdf

Sue <---- former resident of CA
Yup, I'm with Sue on this one. ANY income that's CA source (even if you're a non-resident and you get income from, say a rental in CA) is due for CA tax. In the same light if you earned income while a CA resident and then get paid on it a year later, it's still considered CA source income from the time you earned it and you've still got to pay CA taxes. I've been through this w/ a tax attorney the 2 previous times we broke residency in CA. My advise is go check w/ a tax attorney in CA on this one.

Nina
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