I hate California tax law, and the intransigence of my ex-spouse

[scandal 951]

In 2006 we sold a townhouse in California. We qualified for the capital gains exemption on the sale of a primary residence, and when we filed the joint 2006 federal return in 2007 there was no tax owing on the sale. At the time we were no longer resident in California, we had left the state in 2004. As a non-resident of CA, and as far as I could tell with no tax obligation, I did not file a 2006 CA return.

Fast forward three years. We (the ex and me) have since divorced and moved on. We are not on good speaking terms (I would be, she is not).

I'm remarried. A few days ago, I got a letter in the mail from California FTB demanding an explanation of why I never filed a 2006 return since they have evidence of the sale of the house.

I've just spent an agonizing Sunday trying to dig up old paperwork and understand the complexities of Form 540-NR (Long, short , and any variant that seems relevant). California computes non-resident tax burdens on cryptic fractions of your total world income during that year based upon how much of it they consider to be "California sourced". It's driving me crazy. It appears I do have a CA tax obligation for that year after all, and need to file a return.

Since our original 06 federal return was joint, we're supposed to file the CA return joint as well. There's also an advantage: if it's filed jointly the tax owing is less than if I file it single. However -- the big however -- getting her to agree to sign a retroactive joint return is gonna be an incredible headache.

Aaaaahahhhhhhhh!!!

What a freaking pain in the rear end.

I'm changing my vote to agree with what was said yesterday on a different thread. I hope CA does fall into the ocean. It would serve them right for having the most asinine tax system I've ever seen.

[Danno 1,228]

In 2006 we sold a townhouse in California. We qualified for the capital gains exemption on the sale of a primary residence, and when we filed the joint 2006 federal return in 2007 there was no tax owing on the sale. At the time we were no longer resident in California, we had left the state in 2004. As a non-resident of CA, and as far as I could tell with no tax obligation, I did not file a 2006 CA return.

Fast forward three years. We (the ex and me) have since divorced and moved on. We are not on good speaking terms (I would be, she is not).

I'm remarried. A few days ago, I got a letter in the mail from California FTB demanding an explanation of why I never filed a 2006 return since they have evidence of the sale of the house.

I've just spent an agonizing Sunday trying to dig up old paperwork and understand the complexities of Form 540-NR (Long, short , and any variant that seems relevant). California computes non-resident tax burdens on cryptic fractions of your total world income during that year based upon how much of it they consider to be "California sourced". It's driving me crazy. It appears I do have a CA tax obligation for that year after all, and need to file a return.

Since our original 06 federal return was joint, we're supposed to file the CA return joint as well. There's also an advantage: if it's filed jointly the tax owing is less than if I file it single. However -- the big however -- getting her to agree to sign a retroactive joint return is gonna be an incredible headache.

Aaaaahahhhhhhhh!!!

What a freaking pain in the rear end.

I'm changing my vote to agree with what was said yesterday on a different thread. I hope CA does fall into the ocean. It would serve them right for having the most asinine tax system I've ever seen.

You are keeping in mind Cali is where the rest of the country will be..... before too long?

[one...two...tree 2,762]

Have you considered hiring a tax specialist who works in California? I'd at least consult with one before doing anything further.

Also, they could give the the different scenarios between filing separate and filing joint with your ex. Would your ex be legally liable for half any of incurred tax and penalties or did you have a stipulation within your divorce settlement that assigned responsibility solely to one spouse?

[scandal 951]

Have you considered hiring a tax specialist who works in California? I'd at least consult with one before doing anything further.

Also, they could give the the different scenarios between filing separate and filing joint with your ex. Would your ex be legally liable for half any of incurred tax and penalties or did you have a stipulation within your divorce settlement that assigned responsibility solely to one spouse?

Thanks Steve. I think I may need professional help with this because it does seem to be a non-standard situation.

(I probably need "professional help" anyway, but that's something the rest of the VJ community can judge better than me )

In theory, she has the same obligation I do. In practice however she is really outside the jurisdiction (she lives outside the US and no longer has US status, having abandoned her green card years ago).

The tax amount is not large - it comes to a few hundred dollars no matter how it gets filed. They also will waive any late-filing penalties if I get it to them by March 24. So I may just file single, take my lumps, and be done with it. It's probably easier to do that than to try to fight it any further.

[w¡n9Nµ7 §£@¥€r 123]

I'm changing my vote to agree with what was said yesterday on a different thread. I hope CA does fall into the ocean. It would serve them right for having the most asinine tax system I've ever seen.

Finally, the right and left find common ground. A Kumbaya moment, if there ever was one!

[one...two...tree 2,762]

In theory, she has the same obligation I do. In practice however she is really outside the jurisdiction (she lives outside the US and no longer has US status, having abandoned her green card years ago).

The tax amount is not large - it comes to a few hundred dollars no matter how it gets filed. They also will waive any late-filing penalties if I get it to them by March 24. So I may just file single, take my lumps, and be done with it. It's probably easier to do that than to try to fight it any further.

Yep. That sounds like the least troublesome.

[Ban Hammer 13,403]

I'm changing my vote to agree with what was said yesterday on a different thread. I hope CA does fall into the ocean. It would serve them right for having the most asinine tax system I've ever seen.

it's really not that difficult to understand. just open your checkbook and write them a 4 figure check. see how easy that was?

[spookyturtle 9,466]

Just sign her name on the return and no one will be the wiser.

[scandal 951]

Just sign her name on the return and no one will be the wiser.

(I think that even qualifies as a VJ TOS violation, spooks.....)

Edited March 1, 2010 by scandal

[TBoneTX 45,522]

Just sign her name on the return and no one will be the wiser.

Uh, yyyyyeah... isn't that action "falsification of an official document," which in many or most jurisdictions might be a felony, si man?

[웃 910]

I learned a new word.

Noun 1. intransigence - the trait of being intransigent; stubbornly refusing to compromise

in·tran·si·gent also in·tran·si·geant adj.

Refusing to moderate a position, especially an extreme position; uncompromising.

[w¡n9Nµ7 §£@¥€r 123]

Uh, yyyyyeah... isn't that action "falsification of an official document," which in many or most jurisdictions might be a felony, si man?

You think the IRS is gonna come after you if you give them what they believe you owe them?

[I AM NOT THAT GUY 5,715]

Yep. California is relentless in it's pursuit of tax revenues. I was working on an overseas contract, and although I owed no Federal income taxes, I still owed California, they figured, because the tax I paid the Marshallese Government was not of the same "form" as California's more progressive income tax. Although my debt to California was less than $200, I was hounded for years before they found a way to attach my wages.

[luckytxn 2,264]

I see tax season is under way.

[TBoneTX 45,522]

You think the IRS is gonna come after you if you give them what they believe you owe them?

Rock. Hard place. Balancing the drawbacks of one bad choice (failure to pay) against another (falsification of official document), aargh man.