I have a question concerning my foreign income.  I have been living in
California since September 2004.  I worked in the UK during January
through August 2004.  In February 2005, my UK employer paid me a bonus
of approximately $100K (paid in British Pounds) based on the work I
performed for them from January 2004 through August 2004. Not that it
matters, but I still work for the same company, but am paid now
through their US subsidiary.

My question is:  Is this $100K bonus I received in February 2005
subject to California state income taxes?

Google answers does not  provide tax or legal advice
 see the Important Disclaimer at the bottom page.

However, for the entrtaiment purposes, please accept the following story:
 
  Some people in US think that tax US tax code is complex. Those people
did not look at the international issues of the taxes. If you resided whole
year in California in 2005, you are US person for tax purposes,
unless of course you would fit some unlikely exception in this 

 full text of the tax convention, which came into force on 31st March 2003,
www.icaew.co.uk/librarylinks/index.cfm?AUB=TB2I_25798

Not just CA franchise board, but IRS has well, claims right to tax
your worldwide income, but will give you credit for any tax you
already payed in the UK - without regard of citizenship - if you are a
US person.

Ask your tax accountant to consider Income Averaging, if bonus increases your
usual income significantly.


Big Five Accounting Firms (search term)
http://www.cpateam.com/accounting-big6firms.htm
Big Five Accounting Firms:. Arthur Andersen · Deloitte and Touche ·
Ernst and Young · KPMG Peat Marwick · PricewaterhouseCoopers. Related
Links ...
http://www.planet101.com/accounting_firms.htm

has departments with expertise in this very complex issues 
and companies should pay for this (considerable) expense their
employees incure. Decent California companies often do.

Hedgie

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Clarification of Answer by hedgie-ga on 28 Feb 2006 23:26 PST

I gave said:

"Not just CA franchise board, but IRS  as well, claims right to tax
your worldwide income, but will give you credit for any tax you
already payed in the UK - without regard of citizenship - if you are a
US person"

 Tax treaty is between federal govrnmemt and UK. I meant 

 .. IRS .. will give you credit ...

I realize it was ambigous.

Factually incorrect.  California does not give a credit based on foreign tax paid.