Personal Finance & Money Asked on February 7, 2021
I’m moving to California in Feb 2021 from Chicago, Illinois. I’m looking to sell stock through which I made $25k capital gains in long term stock.
IL capital gains tax is at 4.95% while California is at 13.3%. Does it help if I sell the stock before I leave for California or does it not matter? Reason I ask is since I will be spending 11 months of the year in California, do I still have to pay California state tax for this stock sale when I file my return or will I pay IL tax rate since I was living in IL when I sold the stock?
The moment that California can consider you a tax resident they will claim that all your income after that moment should be taxed by California.
Therefore if you want to assign income to your original state (Illinois), you have to "earn" it before your establish residency in California. That means you will want to complete the sale before moving. Take into account that it can take a few days to settle, so authorize the transaction a few business days before you move.
The dates are very important. So document the important dates for these transactions.
The number of months you are a resident of a state can figure in some calculations, such as deductions and tax credits where the amount is $x per year.
Answered by mhoran_psprep on February 7, 2021
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