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Tax Tips for Californians Relocating to Texas

  • 11 September 2018
  • Author: Alexander Carr
  • Number of views: 771
Tax Tips for Californians Relocating to Texas

Welcome to Texas! Are you from California? It’s a question many Texans have learned to ask lately, and the answer is often affirmative. For years, California business owners have been lured to Texas for its ideal climate of relatively low taxes, low regulation, and high quality of life. Most recently, San Antonio has seen a big boom, with California companies like TaskUs moving to the Alamo City.

But there are some potential tax surprises when moving from California to Texas (in other words, it’s not all brisket and sunshine). Here are two issues in particular:

  • While Texas doesn’t have a state income tax, don’t assume your tax bill will be next-to-nothing. As a Californian, you may be used to completely deducting your state income tax. In Texas, the benefits of no state income tax are replaced by rising property taxes. However, with the new $10,000 cap on writing off state & local  taxes, hopefully you may find that your total state tax bill has been reduced.  
  • It can take a while for California to let you go. It usually takes 18 months for the State of California to consider you a nonresident (and therefore not responsible for state income taxes). California’s Franchise Tax Board (FTB) will scrutinize your move very carefully, especially if you still have business dealings or property in the state. There’s a possible workaround, which involves setting up a new type of trust in another state altogether. The two most popular are the Nevada Incomplete Gift Non-Grantor Trust (NING), and its Delaware equivalent called the DING.

If you’re the owner of a closely held business and are planning a move from California to Texas, feel free to contact us to discuss tax strategies that could help you overcome these and other potential tax surprises.

Image Copyright: paktaotik2 / 123RF Stock Photo

Categories: Blog, General
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