should foreign earned income be added back to CA income?

Taxpayer and spouse are US citizens. TP works overseas under a five-year contract. He reported his foreign earned income in 2019. Spouse lived and worked in California. TP went back the States to see his wife and in February 2020. He planned to leave in March 2020 for overseas company. However, he had to stay because of the Covid-19 lockdown. He worked remotely for the foreign company, received full foreign compensation, and paid foreign income tax credit. In October 2020, TP, spouse, children went to foreign country and started to live and work there. After the contract, TP planned to move to Washington State. There is a great chance they won’t stay in CA. The house in CA has been rented out before they moved in October 2020.

For federal income tax, he reported worldwide income. For California, can they file as part-year resident for 2020? Can they file as non-resident for 2021?

For taxpayer’s 2020 foreign earned income, should the taxpayer add it back to CA source income?

I saw some tax returns filed for US citizens with one spouse domicile in the CA and another spouse worked in the foreign country continuously (with 3 weeks visits to CA) every year. Basically, there are two types of filing: Type 1: file as Resident 540 and report all the income as foreign source income. Type 2: file 540NR with one spouse resident and another spouse non-resident and only report California salary, rental, stock income as CA source income. The difference is huge. Which one is correct? Thank you so much!

Facts and circumstances determine whether TP working overseas remains a CA resident.

That is a great comment.
However, all these taxpayers have the same situations. One spouse stay in California with children, making money or staying as a full-time parent. The other spouse comes back to CA from the foreign country once a year like a snow bird. All the employment contracts with foreign countries are long term contracts.

Only one of my clients moved the whole family to FC and did not plan to come back in several years.

CA FTB publication 1031 Guidelines for Determining Resident Status is a 14-page document, however, we still find questions regarding the resident status.

California taxation is based on domicile, and these are the factors that contribute to the determination whether or not your TP is a Cal domiciliary:
1. Get a new other state driver’s license, and turn in your California one.
2. Move and register your car(s) in your new state.
3. Notify California DMV, move vehicles and re-registration.
4. Insure cars and real estate with insurance in the new state
5. Register to vote in the new state.
6. Cancel California voter registration for old residence.
7. Terminate California club memberships.
8. Join clubs and social groups in the new state.
9. Relocate family to the new state.
10. Move cherished family heirlooms (photos, keepsakes, etc.) to home in the new state.
11. Sell, list for sale, or lease (preferably a long-term lease) any California property—selling is best.
12. Terminate lease of any California property.
13. Lease (long-term) or buy residence in the new state. Buying is best.
14. Notify friends and family of permanent move out of California.
15. Notify banks, credit card companies, etc. of move and provide new state address for statements. Have correspondence including bank statements, credit card statements, etc., sent to new state address.
16. Use healthcare providers and other advisors (except with regards to advice concerning California taxation) in the new state.
17. File change of address forms with US Postal Service and IRS.
18. Notify all contacts of change of address and permanent move.
19. Obtain new state phone numbers.
20. Send holiday cards, birthday cards, and other correspondence from home in the new state.
21. Change professional affiliations and licenses as needed to the new state
22. Establish office or workplace in the new state.
23. Limit physical presence in California as much as possible.