Here in San Francisco, and throughout the greater San Francisco Bay Area, we have a cornucopia of cultures. Many of our clients have relatives, businesses, and even investments in countries as diverse as China or Germany, Canada or France. So as a top international tax CPA firm, working in California, we have more than our fair share of clients who have complex tax issues. But there’s another type of geographic tax issue that can be complicated: multi-state tax.
Multi-State Tax Scenarios
For example, you might live and work in San Francisco, but have a business in Oklahoma. Or you might be an Oklahoma resident, who has moved – temporarily – to San Francisco for a gig at a hi-tech company. Or you might be a tech worker based here in San Francisco, but your firm moves you temporarily to Washington State for more than a few years. Are you a California resident? Are you a Washington resident? What income of what type should be taxed by California, and what by the other state?
Issues of multi-state taxation can get pretty complicated, pretty fast. Another common scenario is the sale of a business, with offices in multiple states. Your business may be headquartered officially in California, but you have lots of business in Nevada or Texas (low tax states). When it’s time to sell, or time for succession planning, there are strategic ways to set up your corporate structure and income structure to avoid paying too much tax. Long-term planning is the key: you can’t move around your corporate structure today, and change the taxes, tomorrow. But with some smart tax planning, you can look to the future and minimize your multi-state tax issues.
Common Questions about California State Taxes vs. the Taxes of Other States
Here are some common questions that clients come into our San Francisco offices on Geary Street, with multi-state tax issues:
- “I am not a California resident, but I am living in California for a six-month assignment at Google or Facebook. Do I have to pay California taxes?”
- “I own a business in Oregon, but now I have moved permanently to California. I want to keep my business interests in Oregon, but to which state do I owe taxes and how much?”
- “I am a tech entrepreneur, and my start-up is incorporated in Delaware. How does this impact my California taxes, if a lot of my business is in California?”
- “My business spans many states, but my R&D expenses are largely in California and my profits come from around the country. How does this impact my taxes?”
If you have a multi-state tax issue – be it California, Texas, Nevada or any other state in these grand United States – give us a call. Every situation is unique. Every individual is unique. Contact us for a free 15 minute phone consultation, and we can begin to sort out your best strategy for minimizing multi-state taxes.