Navigating Tax Filing After a Texas Move: A Comprehensive Guide for Ex-Californians

For many residents, the decision to move from California to Texas is not only a significant life change but also a major adjustment when it comes to tax responsibilities. If you moved to Texas mid-2020 but your employer has continued to withhold California state tax, you’re not alone. This guide will walk you through the necessary steps to ensure you file your taxes correctly and potentially claim a refund.

Understanding Your Tax Responsibilities

When you move states, your tax obligations can change significantly. California (CA) and Texas (TX) have different tax laws, which can sometimes lead to complications for newly relocated residents. If you are now a Texas resident but your employer has been withholding CA state tax for the entire 2020, this is a situation that requires careful handling.

Federal and State Tax Filing

The first step in addressing this issue is to file your federal tax return as a Texas resident for 2020. Texas is a no-state-income-tax state, which means that you no longer have to pay state income tax. Meanwhile, California has a complex tax system with different rules for residents who move within a tax year. You will need to determine whether you are a part-year resident or a non-resident for tax purposes in CA.

Filing in Texas

To file as a Texas resident on your federal tax return, you will need to provide documentation showing that you established residency in Texas. This can include:

Utilities bills with a Texas address Driver’s license or state ID with a Texas photo Rental agreement or property deed for a Texas residence Proof of voter registration in Texas, such as voter registration card or absentee ballot

Filing in California

Even if you no longer are a resident in California, you may still owe tax on certain income earned in California for the 2020 tax year. California resident and part-year resident rules for 2020 are different, so you will need to determine which you apply to.

Part-Year Resident

If you were a resident of California for part of 2020, you may need to file a CA tax return to claim a refund. This is because your employer may have been withholding too much state tax. You can use the California Franchise Tax Board (FTB) secure web site to calculate your tax liability and determine if you are eligible for a refund. Simply file for the 2020 tax year in CA, and you can request to receive a refund for excess tax withheld from the federal return.

Non-Resident

If you were not a resident of California for the entire 2020 tax year, you may not owe CA state tax on your 2020 federal return. However, you should still file a CA tax return if you earned income from sources in CA. This allows you to claim any refund due from withheld state taxes.

Tips for Filing

When filing your taxes in both states, it is important to keep detailed records of all transactions, especially those related to income, deductions, and the withholding of state taxes. Key tips include:

Verify your California filing status to ensure you do not overpay. Keep copies of all tax forms and receipts. Use online e-file programs to ensure accuracy and submit your taxes on time. Consider seeking professional tax advice if you need additional help.

Conclusion

Making sure you handle your tax filing correctly after a move can save you time and potential penalties. By following the steps outlined above and ensuring that you file both your federal and state tax returns correctly, you can enjoy a life with lower state income tax while having the opportunity to claim any refunds due to you from withheld state taxes.

Enjoy your new life in Texas without the burden of California state income tax. Welcome to a future of tax efficiency and financial peace of mind.