Jordan Sute, CPA from Sute CPAs joins Casey Smith and Brad Lyons, CFP® to discuss tips for moving to lower tax states. What should you do besides change your drivers license?
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Being Taxed by Two States
Pretend you are moving from New York City to Los Angles. First of all, you must establish a domicile in one of the states. If not, both states could fully tax you. This is because you could meet both states requirements for taxation. They could both claim that you were there the entire time or enough of the time.
How to Prove You Have Moved
First, get a driver’s license for the state you have moved to. Then register your car, register to vote, actually vote, and get a new gym membership. After that, sever your relationship with your old state. Do this by canceling your memberships, ending lease agreements, or selling your home. Make sure you establish that you live in one place, not the other and do it by a certain date. Don’t linger.
It’s important to keep records of your new domicile. If you are moving for a new job, keep track of your offer letter so that it shows your start date. Keep personal logs and then have a few receipts to back it up.
When is the best time to move?
Most people move in the summer. If you have been filing Georgia tax returns for your whole life and then you file for Alabama, a state may look into you. Even if you moved in the summer, they will want to tax the months of income you gained in GA.
What if I have a second home?
If you have a second home in Florida, but spend most of your time in Georgia, it is important to learn what each state’s rules are to consider you a resident. Then, you must establish a domicile in one of the states. You have to take the steps to prove that one of them is your home.
Ultra High Net Worth
Pretend you have a successful business in Georgia, you live in Florida, and you have another home overseas. In a situation like this, be very mindful of where you are earning your income and where you are spending your time. In this case, keeping receipts is helpful because a state could come in and ask for a portion of your income tax.
1:13 Being Taxed by Two States
3:17 How to Prove You Have Moved
4:31 Establishing Domicile
6:55 When is the best time to move?
8:40 What if I have a second home?
10:13 Ultra High Net Worth
Learn more about Brad Lyons.
Learn more about Matthews Barnett.