California source income is income the state can tax because of where it was earned, not because of where you live. That is why leaving California does not always end your California tax bill. Even as a nonresident, you can owe California tax on equity compensation you earned while working in the state, on certain…
Continue reading ›Quick answer: If you are asking do I have to respond to IRS Letter 6174, the short answer is no. Letters 6174 and 6174-A are “soft” educational letters that do not require a response. Letter 6173 is different: it generally requires a written response within about 30 days, and ignoring it can trigger an examination.…
Continue reading ›The short answer to the FBAR vs. Form 8938 question is that they are two separate filings with different rules, and many taxpayers have to file both. The FBAR (FinCEN Form 114) goes to the Treasury Department and reports foreign financial accounts once they top $10,000 in total. Form 8938 is a FATCA form filed…
Continue reading ›When it comes to moving out of California, taxes are the part most people underestimate. Leaving the state does not automatically end your California tax exposure, and high earners who relocate are exactly the people the Franchise Tax Board (FTB) tends to examine. A clean departure is one you can prove: a genuine change of…
Continue reading ›The core FBAR filing requirement is straightforward: a U.S. person who has a financial interest in, or signature authority over, foreign financial accounts must file an FBAR if the combined value of those accounts tops $10,000 at any point during the calendar year. The FBAR is FinCEN Form 114, and it is filed electronically, separately…
Continue reading ›To fight a California residency audit, you have to do more than say you moved. The Franchise Tax Board (FTB) starts from the assumption that you never really left, and it will test that assumption against your bank records, travel history, and daily location data. Winning means responding carefully, documenting where your life actually centers,…
Continue reading ›The California billionaire tax, Proposition 40 on the November 3, 2026 ballot, proposes a one-time 5% tax on the net worth of state residents worth $1 billion or more. As written, it would reach only a few hundred people. Its real significance for the broader high-net-worth community is what it signals: California is sharpening its…
Continue reading ›If you are a California founder or investor counting on the Qualified Small Business Stock exclusion, there is a trap you need to understand before you sell. The California QSBS rules do not follow the federal ones. You can qualify for a 100% federal exclusion under Section 1202, exclude every dollar of gain on your…
Continue reading ›If you have just received an IRS audit notice, the first question is almost always the same: why me? Did the IRS catch something specific? Did a software algorithm flag the return? Did someone report you? Was it random? The honest answer is that IRS audit selection is rarely random, and “why was I selected…
Continue reading ›California’s proposed billionaire tax has put the California residency audit back in the national spotlight, and made it the single most important issue for wealthy individuals who have recently left the state or are thinking about it. As Proposition 40, the 2026 Billionaire Tax Act, heads toward a statewide vote, the California Franchise Tax Board…
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