California Residency on Trial for $5,924 What Ajith (2024) Says
Call to Action:
If you’re unsure whether California still considers you a resident—or you’re being audited over what seems like a small amount—I can help you evaluate your facts and build the documentation before the next FTB letter arrives. Contact me to talk through your situation.
Case link: P. Ajith, 2024-OTA-521 (nonprecedential)
What happened in Ajith
This case is a textbook example of how California applies residency rules to students and early-career taxpayers—and why even a small assessment matters.
Who: A California-domiciled student attended the University of Michigan (2015–2019). He paid out-of-state tuition, kept a California driver’s license, and did not file Michigan returns. He used a California address on multiple documents and on his returns.
Year at issue: 2018. The student spent most of the year at school in Michigan, then took a three-month summer internship in Washington state. After the internship he returned to Michigan to finish the year.
How the tax issue arose: He filed a California resident return for 2018 but excluded the Washington internship wages from California income. The FTB issued an NPA adding those wages back and proposed additional tax of $5,924 (plus interest). The taxpayer paid and then filed a claim for refund (total $6,791.87, including interest).
OTA’s analysis and holding
The Office of Tax Appeals walked through California’s residency framework:
Domicile: A domicile persists until a new one is established by physical presence plus intent to remain. The OTA found the taxpayer remained domiciled in California in 2018. Indicators included the California license, use of a California address, no Michigan returns, and subsequent filing of California resident returns for 2019–2021.
Temporary or transitory purpose: Because he was domiciled in California, the question became whether his time outside the state (school in Michigan and internship in Washington) was only temporary or transitory. Looking at the totality of connections (registrations/filings, personal and professional ties, physical presence and property), OTA concluded his absences were temporary; therefore, he was a California resident in 2018 and taxed on worldwide income, including the Washington wages.
Bottom line: Refund denied. The $5,924 assessment stood.
Why this matters (far beyond $5,924)
This case is a reminder of the approach FTB will take on the determination of California residency:
Students & interns: If you start as a Californian, spending most of the year in another state for school or a temporary job does not by itself make you a nonresident. Expect close scrutiny of driver’s licenses, addresses, tax filings, and where you end up after school.
Young professionals & remote workers: Short-term assignments or internships outside California are commonly viewed as temporary. Even if wages were earned entirely in another state (like Washington), they are still taxable by California if you are a California resident.
Burden of proof: FTB’s residency determinations are presumptively correct; you must prove a change in domicile with credible, objective evidence. Intent alone is not enough.
Practical guidance I give clients
If you’re leaving California, make it real and make it early. Obtain a new state license, register to vote, file a resident return in the new state when required, move your banking and professional ties, and document your new home and community.
File consistently. Inconsistent filings (e.g., claiming to be a non-resident while filing California resident returns in adjacent years) are a problem. In this case, it is likely what began the investigation by FTB.
Think narrative, not checklists. OTA and FTB look at the whole story. Your documents should align with the facts you present.
If you are moving out of California or already facing a residency audit, reach out to me. I will help you assemble the right evidence and align your filings to your actual facts before a small issue turns into a bigger one.
