Client was a CA resident for 8 months in 2010 (and a long-time CA resident prior to 2010) before moving out of the country to go back to college to obtain her Masters degree. Client is a US citizen. Client left her established 15-year career to return to college. She is single, and has no family in CA. She abandoned all connections to CA, and has no intention of returning to CA.

During 2010, she received a total of $20,000 in dividend income from Wells Fargo in addition to wages totaling $100,000. She earned all wages while living in CA, as well as $10,000 of the dividends. The other $10,000 of the dividends was received while living abroad.

I understand that she has a Federal & CA filing requirement. However my questions are:

1. Are the dividends she received while living abroad taxable to CA?

2. Is a US citizen required to maintain a tax domicile in a given state in the US while permanently living abroad?

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>>She abandoned all connections to CA, and has no intention of returning to CA<<

Under California law (the same as most other states), she is still a California resident until she establishes a new DOMICILE. Unless she has taken positive steps to stay in her college town the rest of her life, she remains subject to California tax on her world-wide income.

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1. NO

2. NO

File a CA540NR - non-resident return and pro-rate the Dividends.

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>>1. NO <<

Max, my opinion is based on California law as I said. You didn't say what your opinion is based on.

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