Important warning for California residents and expats planning an overseas assignment
Moving abroad for work sounds like a dream. New country. New income. New lifestyle.
Then taxes enter the chat.
If you currently live in California, or you lived there before moving overseas, you need to understand one critical reality:
California Taxes Can Follow You Overseas
California is one of the most aggressive tax states in the U.S. When it comes to residency, the state does not simply accept that you left.
If the Franchise Tax Board (FTB) decides you are still a California tax resident, it can tax your worldwide income, including:
Salary earned in Germany
Consulting income in Singapore
Startup equity in Portugal
Remote work performed from anywhere in the world
Even if you:
Live abroad full time
Pay foreign income taxes
Have not returned to the U.S. in years
If California says you are a resident, your global income is taxable.
California vs. IRS: A Major Difference for Expats
At the federal level, the IRS provides relief for Americans working abroad.
Federal Expat Tax Benefits
Qualifying expats may use:
Foreign Earned Income Exclusion (FEIE) – roughly $130,000 of foreign income excluded (indexed annually)
Foreign Housing Exclusion or Deduction – helps offset high overseas living costs
Foreign tax credits – reduce double taxation
These provisions acknowledge that living and working abroad is different from working in the U.S.
California Does Not Recognize These Exclusions
California:
Does not allow the Foreign Earned Income Exclusion
Does not allow the foreign housing exclusion
Does not provide relief for taxes paid to another country
If you are a California resident for tax purposes, the state can tax 100% of your foreign income.
This can result in:
Foreign income tax
U.S. federal tax (above FEIE limits)
California state tax on all income
That combination can create one of the highest effective tax burdens for expats.
California Tax Residency: The Key Risk for Expats
Your tax outcome depends on one issue:
Did You Successfully Break California Residency?
Residency is not just where you live today. The FTB looks at your connections to California, including:
Where you intend to return
Location of your spouse and family
California driver’s license
Bank accounts and investments
Property ownership
Business ties
Mailing address
If these ties remain, California may argue you never truly left.
And if they win, your global income becomes taxable.
Why Expat Tax Planning Must Happen Before You Leave
Many professionals move abroad first and plan taxes later. That approach often leads to:
Unexpected California tax bills
Multi-year audits
Double or triple taxation
Six-figure liabilities
Proper pre-departure planning can legally:
Break California tax residency
Reduce worldwide tax exposure
Coordinate federal, state, and foreign tax systems
Protect overseas income
This is not about hiding income.
It is about structuring your move in a compliant way that holds up under scrutiny.
How We Help California Expats
At ATP, we specialize in California expat tax planning and international mobility strategy.
We help you:
Understand how California defines tax residency
Identify the ties that keep you tax-tethered
Structure your departure correctly
Align U.S., California, and foreign tax obligations
Avoid unnecessary double taxation
The goal is not just to live abroad.
The goal is to live abroad profitably.
The Bottom Line on California Expat Taxes
Before accepting an overseas assignment, remember:
California taxes worldwide income
It offers no expat exclusions
Residency determines everything
Planning must happen before departure
The IRS may provide relief for expats.
California does not.
If you want your international career to be financially rewarding, tax planning is the price of admission.
Talk to a California Expat Tax Specialist
📞 Schedule a consultation with ATP today
Make sure your move abroad:
Keeps more of your income
Avoids unnecessary California taxes
Complies with U.S. and international tax law
Supports long-term wealth, not surprise tax bills
Because the only thing worse than missing California…
is paying California taxes when you no longer live there.