I hate California tax law, and the intransigence of my ex-spouse

[Trompe le Monde 1,107]

Yep. California is relentless in it's pursuit of tax revenues. I was working on an overseas contract, and although I owed no Federal income taxes, I still owed California, they figured, because the tax I paid the Marshallese Government was not of the same "form" as California's more progressive income tax. Although my debt to California was less than $200, I was hounded for years before they found a way to attach my wages.

It is complete and utter bull$hit. They use your worldwide income to figure out your rate of tax with no consideration for the tax you have already paid to a foreign government. The IRS accounts for this with the Foreign Tax Credit, so that you won't actually pay more tax than a full-year resident of the US. Unlike in California!

Surely it is counter to dual taxation treaties the US has in place with various countries.

[Gary and Alla 3,694]

In 2006 we sold a townhouse in California. We qualified for the capital gains exemption on the sale of a primary residence, and when we filed the joint 2006 federal return in 2007 there was no tax owing on the sale. At the time we were no longer resident in California, we had left the state in 2004. As a non-resident of CA, and as far as I could tell with no tax obligation, I did not file a 2006 CA return.

Fast forward three years. We (the ex and me) have since divorced and moved on. We are not on good speaking terms (I would be, she is not).

I'm remarried. A few days ago, I got a letter in the mail from California FTB demanding an explanation of why I never filed a 2006 return since they have evidence of the sale of the house.

I've just spent an agonizing Sunday trying to dig up old paperwork and understand the complexities of Form 540-NR (Long, short , and any variant that seems relevant). California computes non-resident tax burdens on cryptic fractions of your total world income during that year based upon how much of it they consider to be "California sourced". It's driving me crazy. It appears I do have a CA tax obligation for that year after all, and need to file a return.

Since our original 06 federal return was joint, we're supposed to file the CA return joint as well. There's also an advantage: if it's filed jointly the tax owing is less than if I file it single. However -- the big however -- getting her to agree to sign a retroactive joint return is gonna be an incredible headache.

Aaaaahahhhhhhhh!!!

What a freaking pain in the rear end.

I'm changing my vote to agree with what was said yesterday on a different thread. I hope CA does fall into the ocean. It would serve them right for having the most asinine tax system I've ever seen.

And you want more Federal government regulation? So we can all be like California, right?

FAIR TAX now!

[Ali G. 37]

I'm changing my vote to agree with what was said yesterday on a different thread. I hope CA does fall into the ocean. It would serve them right for having the most asinine tax system I've ever seen.

I thought you're a big advocate of upholding the "Constitution" and all of that silliness. Your situation is why most taxes are now handled on the federal level in AUS. Not only is the system here extremely inefficient but it's a huge waste of time and money. It's basically the wrong era for county/state taxes. Unlike Canada, Australia still has US style states rights, but when it came to takes, it was a no-brainer that these should be pushed to the federal level.

Then again we are talking about CA here. You have to ask yourself, with all of the money that California pumps through the economy, how in the hell are these guys bankrupt? The states GSP $1.812 trillion, total area is 163,696 sq mi, population is 36,961,664 yet the state is bankrupt.

And you want more Federal government regulation? So we can all be like California, right?

FAIR TAX now!

The irony between your post to that of mine. Only difference is that I have living proof of which system (approach) works better.

Edited March 1, 2010 by Booyah

[Trompe le Monde 1,107]

Not only is the system here extremely inefficient but it's a huge waste of time and money.

Exactly

[Ali G. 37]

Exactly

Here is the real kicker, there is no capital gains on your primary residence. Some states though make you pay a stamp duty fee (real estate transfer tax) when you buy or sell, which is upfront and a one off payment.

Edited March 1, 2010 by Booyah

[Darnell 8,478]

a few hundred bucks?

I'm sorry - if it was under 1000 dollars, I'd pay it, and move on.

Ya, I know, there's the principle of the thing, but if under 1000 bucks? HEI !

there's got to be a tax category for paying the tax, write it off on yer tax return.

[Usui Takumi 1,562]

It is complete and utter bull$hit. They use your worldwide income to figure out your rate of tax with no consideration for the tax you have already paid to a foreign government. The IRS accounts for this with the Foreign Tax Credit, so that you won't actually pay more tax than a full-year resident of the US. Unlike in California!

Surely it is counter to dual taxation treaties the US has in place with various countries.

Yep it really sucks. We're getting double taxed this year too by CA. Last year was okay because I was able to file most of my wife's income as a non CA resident.

Luckly for 2010 her business will have been relocated to the US so its a non issue after this.

[spookyturtle 9,466]

(I think that even qualifies as a VJ TOS violation, spooks.....)

It's not immigration related.