I know California taxes you if you leave the state based off grant date to how long you spend. Two questions: 1. Is the taxable amount only based off of the rsu income and not salary / bonus? 2. Are marginal taxes applied to the full income of your rsus or the fraction after applying the allocation ratio? Regarding 1: In https://www.ftb.ca.gov/forms/misc/1004.html it seems to say so: California workdays from grant date to exercise date ÷ Total workdays from grant date to exercise date Income taxable by California = Total stock option income × allocation ratio Regarding 2: Option 1: So if you had an 800k grant, left California after a half year from grant date and then your first year on vest you’d be taxed 200k * California tax * allocation ratio (0.5) = 15k. Option 2: OR would California tax be based off the income after allocation ratio is achieved so you’re taxed 100k (200k * 0.5) * California tax = 5.8k? Looking at the link I posted it sounds like option 2: The total workdays from grant date to exercise date equal 1000 workdays (700 California workdays + 300 other state workdays). Your allocation ratio is .70 (700 California workdays ÷ 1000 total workdays). Therefore, California will tax 70 percent of your total stock option income. So it’d be option 2 correct? #personalfinance
By allocation ratio do you mean fraction of working days spent in CA / total working days (from grant to vest)? In that case for 2, it depends on if you’re deemed a CA resident or nonresident, NR only get taxed on income * allocation ratio, resident would get taxed on full amount. You should read up on the conditions of nonresidency to see if you leaving the state would qualify
Yes I’d be a nonresident of CA. I am moving out to live with my family in no income tax state. So it sounds like I only pay taxes on rsu amount * allocation ratio instead. In my case I listed that’s 5k first year and less subsequent years.
OP, any idea how capital gain tax works for CA, when one leaves? Say one moves to TX on Dec 31, 2022 and on first trading day of January 2023 he sells stocks with 100k capital gain (the whole gain happens during CA stay). Does he pay $0 state capital gain tax? Or does he pay $(100k * CA tax rate)?
Capital gains is only taxed by the state of residence. If you live in a different state you pay that states rate. (Not a tax expert though but that is my understanding)
We will still take your money because it’s based on grant time