I have received a daily per diem from a company I work for in San Francisco. I have now been in CA for a year, but still travel home for a week every month. The company has now taken my Per Diem saying that the new CA law states that after a year of subsistence it can be taxed. I have looked for documentation stating this, with no luck. Is it true? And if so are there ways around it?

I don't have an answer about the per diem, but just curious: it seems you are now a CA resident (having spent > 6 months there). So you're filing CA taxes as a resident, and your old home state as a non-resident - is that right?

Go to the website for the CA Franchise Tax Board. You can probably get a synopsis of the law from there.

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Originally Posted by ebaines

I don't have an answer about the per diem, but just curious: it seems you are now a CA resident (having spent > 6 months there). So you're filing CA taxes as a resident, and your old home state as a non-resident - is that right?

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Yes as a resident but mainly because I made all my money for the year in CA and have nothing to claim as income in NC.

In that case I would think (though again, I don't really know how the details work in CA) that the per diem would be a taxable benefit paid by your employer, since while you are in CA you are "home," and therefore not incurring any business-related travel expenses.

I tend to agree with Ebaines. You in fact are living in California on a permanent basis now, especially if you have not maintained an apartment in NC.

I live in Arizona and work in San Diego, CA... Arizona is my home-of-record... I had per diem which ended. I am not a resident of CA, just working here in my mind and on paper.

I was also told by my agency that if I take off 2-3 weeks, we can end and restart my contract WITH per diem.

Rick

Rick:

You can do that, but it is a risky proposition. Both the IRS and state tax authorities take a holistic view of your circumstances when it comes to such arrangements,

If you just take a few weeks off to avoid the tax consequences of getting per diem over a year, the tax authorities will recognize that tactic for what it is and impose the tax anyway.

I ended up going to a tax place... between my temp job out of state plus the small business I run, we got it all covered nicely.

Thanks for all the comments...

Rick