We’ve been focusing on California business owners lately on the Illumination Wealth Blog. There has been an uptick in interest for people to move their businesses—or at least themselves—out of California’s high-tax environment and relocate to a lower-tax state like Nevada, Arizona or Texas.
If you haven’t read the previous articles in this California tax planning series, I recommend you check them out below:
Today we want to talk about tax planning for for anyone who currently has income associated with California in any way, shape or form:
As you can see, there are many different situations that can tie your income to California. Whether or not you need strategic tax planning may depend on the complexity of your residency, employment or business ownership situation.
It’s no secret that California’s Franchise Tax Board has one of the most complicated tax systems in the country, and we also have some of the highest tax rates for all types of taxes (income, property, sales, cars, gas, cigarettes—you name it).
If you have any source of income generated from a California-based company or claim this state as your primary residence (or one of your residences), you will likely benefit from careful tax planning. We work with many business owners and successful individuals who have very complex situations revolving around California income, sales and property taxes.
It is very important to understand how your work and/or residency status affect your tax liabilities. There may be tax benefits you are missing out on. There may be potential penalties you are not aware of. Strategic tax planning as a California resident, employee, independent contractor or business owner will make a significant difference. The goal is to limit your liabilities and save as much money as you can.
We also deal with many residents and business owners who are thinking about moving to a new state to take advantages of lower taxes. This is never as simple as it sounds. Smart planning depends on so many different factors. Sometimes moving a business or residence out of state doesn’t allow you to escape California taxes much at all. Be sure and check out last week’s article for some specific scenarios where it may or may not make sense to move.
The Franchise Tax Board uses a “facts and circumstances” testing procedure to determine residency and sources of income. Smart California tax planning requires you to know the tax rules and understand how anything you do will affect your tax liabilities in this state. Working with a knowledgeable tax advisor, wealth advisor or business strategist will help you make sound financial decisions.
We offer all of these guidance services at Illumination Wealth. We can look at every aspect of your personal and business financial situations and help you navigate the complex waters of the California tax system. For all your tax planning and business planning needs, contact Illumination Wealth today to set up a no-obligation introductory consultation with one of our top advisors.