Pamela Anderson has reached a divorce settlement with Rick Salomon. Hopefully, for the last time.
The couple has been married twice, once in 2008, and again in 2014. Their first marriage was annulled for fraud after only two months together. Salomon and Anderson must be gluttons for punishment because they tried again in January, 2014. Anderson filed for divorce only four months later, but dropped the divorce after they reconciled. The reconciliation didn't last as she filed for divorce in California in February of this year, and he filled for annulment in Nevada.
After some pretty nasty accusations back and forth, the two have reconciled enough to come to a divorce settlement. Pamela gets over $1 million, and agreed to no longer contest Salomon's residency in Nevada.
A million dollars for not challenging his residency? Why would Salomon care? Did Pamela get one over on him?
Actually, Salomon might have saved himself a lot of money by getting Anderson off his back on this issue. Anderson was accusing Salomon of trying to dodge California's income tax by claiming he lived in Nevada.
Unlike California, Nevada doesn't tax personal income, and Salomon had a lot of personal income, reportedly $40 million from gambling. With California's tax rate ranging from as little as 1 percent for the first $7,749 of income to 13.3 percent for income over $1 million, Salomon could have faced a very large tax bill.
Personal Income Taxation
California taxes income in two ways. It taxes the income of residents of the state, and income made in California, even if the person lives in another state.
To be liable for California income tax you must be domiciled in California. You can have houses in many states, but only domicile in one state.
To determine domicile, state tax agencies generally consider: the location of your homes, how much time you spend in state, location of your business or employment, where you keep valuables and personal items, family ties, and where you registered to vote and applied for a driver's license.
Some other states consider you domiciled in that state if you spend more than a certain number of days in that state. For example, you are considered domiciled in Connecticut if you have a house in Connecticut and spend more than 183 days there, even if you also have a house in another state.
Income earned in state
Even if Salomon can prove that he doesn't live in the state, he may still have to pay income tax on any income earned in California or from California sources. If you live in one state, and earned income in another state, you'll have to file two tax returns, a resident state tax return and a non-resident state tax return.
As for Anderson and Salomon, hopefully no one will be changing their minds again anytime soon.