Complicated(to me anyway) state residency questions?

[Northforker]

We are currently residents of Kentucky.
We have two vehicles currently registered and licensed in Kentucky.
We currently Have Kentucky Drivers licenses
We own a home in Kentucky
We pay property taxes in Kentucky
We currently pay income taxes to Kentucky
We currently vote in Kentucky.
We leased a lot in Florida on an annual basis
We will soon own an RV that will be placed on this lot in Florida permanently.
We spend October through March in Florida typically (6 months plus 1 day per year)
Questions:
Can we establish residency in Florida and keep our vehicles that are left in Kentucky registered and licensed in Kentucky. We don’t leave them in Florida?
We would have Florida drivers licenses?
We would vote in Florida?
We would claim residency in Florida and Not pay Kentucky income taxes?
Florida does not have income tax.
What about health insurance?
Is this arrangement possible?

 

[Sunset]

Probably have to register you cars in FL, and auto ins in FL
Set your bank address as FL, even if you just online bank.
Do your voting in FL.

I don't know how hard KY likes to keep the income, so basically you will be fighting the home in KY , vs an RV (which is not a permanent residence).

Some places just accept your word, you declare I'm moved and it's done. Others are famously wanting proof like California.

 

[braumeister]

I don't know all the details, but we had neighbors who did that. Lived in KY, then bought a condo in FL and started spending six months and a day down there. They kept one car here at their place in KY, but it was registered in FL like their other car. AFAIK, their only remaining link to KY was their home here. Gradually, they spent more and more time in FL, and eventually they sold their old KY home and moved full time to FL. They were both lawyers, so I imagine if there had been a loophole they knew of it, yet still transferred everything to FL.

 

[MichaelB]

We are currently residents of Kentucky.
We have two vehicles currently registered and licensed in Kentucky.
We currently Have Kentucky Drivers licenses
We own a home in Kentucky
We pay property taxes in Kentucky
We currently pay income taxes to Kentucky
We currently vote in Kentucky.
We leased a lot in Florida on an annual basis
We will soon own an RV that will be placed on this lot in Florida permanently.
We spend October through March in Florida typically (6 months plus 1 day per year)
Questions:
Can we establish residency in Florida and keep our vehicles that are left in Kentucky registered and licensed in Kentucky. We don’t leave them in Florida?
We would have Florida drivers licenses?
We would vote in Florida?
We would claim residency in Florida and Not pay Kentucky income taxes?
Florida does not have income tax.
What about health insurance?
Is this arrangement possible?

Do you work in Kentucky and do you have any earned income that originates in Kentucky?

 

[OldShooter]

I recall a flurry of discussions a few years ago to the effect that states were becoming very aggressive with people who moved out of state. Not just counting days in/out, but even looking at where their doctors, dentists, and pets' vets were located. IIRC New York was one of the problems states.

So, you'll probably have to explore your questions locally and possibly with people who have moved to FL from KY to see what difficulties they have had, if any. You might even learn something by calling the state and asking how they handled residency enforcement. "I'm moving out of KY to FL. What do I need to do to change my residency?"

 

[Northforker]

Do you work in Kentucky and do you have any earned income that originates in Kentucky?

I'm retired, my wife is retired
I have passive income from my portfolio
I draw SS
I occasionally accept a consultant fee from my former employer who is based in Indiana for individual assigned tasks. less than 10% of my annual income.

 

[ncbill]

No problems as long as you change driver's license, insurance, voting, mailing address for all bank/brokerage accounts, etc. to FL.

You also are required to notify your insurer of the "where parked" address of your vehicles, whether in FL or KY.

Plus that your place in KY (& FL) is unoccupied for whatever period of time you're not resident there.

Since that might well increase the insurance premiums for those properties I suspect many snowbirds don't do so.

 

[MichaelB]

I'm retired, my wife is retired
I have passive income from my portfolio
I draw SS
I occasionally accept a consultant fee from my former employer who is based in Indiana for individual assigned tasks. less than 10% of my annual income.

Kentucky is one of the few states that defines residency. According to Taxslayer, it is

According to the Kentucky Instructions:

A Kentucky Resident is an individual that spends at least 183 days in Kentucky during the tax year.

This definition apparently is codified. https://statecodesfiles.justia.com/kentucky/2015/chapter-141/section-141.010/section-141.010.pdf

Florida residency is determined by your declaration of intent to reside there. You demonstrate that as indicated by ncbill”

No problems as long as you change driver's license, insurance, voting, mailing address for all bank/brokerage accounts, etc. to FL.

Leaving the cars registered in Ky weakens your case. Your insurer will want to to declare a primary residence and insure based on that, and if it’s not Fl the Ky tax authority may challenge your becoming a,non-resident.

 

[HarveyS]

I have no knowledge of KY, but suggest you not underestimate the lengths that states will go to as they try to protect their revenue. The tax authorities in the Land of Lincoln go as far as to consider where your doctors, dentists, etc. are. Where is your wedding album? They check toll records to see if your cars were operated while you were away.

This is from my recollection of an article in the WSJ some time ago about folks moving out of IL, and the tax authorities chasing them.

I assume in your case the burden will fall to you to meet KY's standard to their satisfaction.

I left IL a few years ago and have had no issues - but, I sold my home, so a clean break.

 

[EarlyandLate]

I think KY will be difficult to deal with in this regard unless you make a pretty clean break. A few years back, I was going to become essentially homeless for a year (in a good way). Mainly for purposes of ACA health insurance, I established residency at a relative's house in KY. I did file KY income tax that year, again because the ACA insurance required it. At the end of the year, I left and established residency here in GA. Driver license, purchased property, car registration, voter registration. Later that year, I discovered that my emergency savings account that I had kept at a credit union in another state for years had vanished. Panicked, I called the credit union. They told me that the state of KY had taken it as "unclaimed property". They were very apologetic, but said that they had to comply. I did get it back, but it was heart stopping for a while. I have no idea why KY thought they had the right to do that. I had lived in yet a different state for years, leaving that account there and never had a problem.
I guess the moral of the story is that KY is aggressive about things like that. An aside, KY had it's own ACA Marketplace and did not participate in the federal one. I also had trouble escaping those folks.

 

[pb4uski]

...Is this arrangement possible?

Yes, it is. I went through this a few years ago, from VT to FL. Conceptually, it is as if you moved from KY to FL but still owned a vacation home in KY.

Establish residency in FL... register to vote in FL, get FL drivers licenses, register in FL any cars you use in FL or that go back and forth between KY and FL, apply for homestead in FL (I'm not sure if you can do that with an RV or not), renounce your homesteading benefit in KY, move your banking to FL, including any direct deposits from pension, SS, etc, change address for all your financial accounts to FL, get primary care physician, dentist, etc in FL, change Medigap policy to FL, etc.

IOW, sever all ties with KY other than those that an out-of-state resident with a vacation home in KY might reasonably have. We kept our boats and trailers and one vehicle, all of which are only used in VT, registered in VT.

The important thing to get the $0 FL income tax is to make sure that you are no longer a KY resident. Keep track of your days spent in KY and out of KY.

You may want to crunch the numbers first. For us, Medigap was about the same, car insurance was more, homesteading benefit was less... everything other than income tax pretty much offset to nil, so the real benefit was not paying VT income tax.

If you are challenged, the fact that you have a nice home in KY and an RV on a lot in FL might be a factor against you but if you have everything else aligned well you should have a good defense.

https://www.kiplinger.com/retirement/601492/how-snowbirds-can-be-taxed-as-a-florida-resident

 

[pb4uski]

I think KY will be difficult to deal with in this regard unless you make a pretty clean break. A few years back, I was going to become essentially homeless for a year (in a good way). Mainly for purposes of ACA health insurance, I established residency at a relative's house in KY. I did file KY income tax that year, again because the ACA insurance required it. At the end of the year, I left and established residency here in GA. Driver license, purchased property, car registration, voter registration. Later that year, I discovered that my emergency savings account that I had kept at a credit union in another state for years had vanished. Panicked, I called the credit union. They told me that the state of KY had taken it as "unclaimed property". They were very apologetic, but said that they had to comply. I did get it back, but it was heart stopping for a while. I have no idea why KY thought they had the right to do that. I had lived in yet a different state for years, leaving that account there and never had a problem.
I guess the moral of the story is that KY is aggressive about things like that. An aside, KY had it's own ACA Marketplace and did not participate in the federal one. I also had trouble escaping those folks.

WADR, I think you are mixing apples and oranges. It is very common for all states to require that unclaimed property be remitted to the state for safekeeping. What you describe could have easily happened to a full-time KY resident. It didn't have anything at all to do with your move from KY to GA.

 

[Northforker]

Thanks for all of the responses and advice, seems like a lot of effort for minimal savings if any. Insurance costs will be higher in Florida. Not sure I want to find all of the doctors and dentist in a very crowded state like FL. Thanks for the discussion!

 

[EarlyandLate]

WADR, I think you are mixing apples and oranges. It is very common for all states to require that unclaimed property be remitted to the state for safekeeping. What you describe could have easily happened to a full-time KY resident. It didn't have anything at all to do with your move from KY to GA.

I never said that it had anything to do with my move FROM KY. It happened because I lived in KY for 11 months. I was pointing out that KY seems to be hyper in regard to such things. The state in which I had the account never thought it was abandoned in all the years I had left it there. The state in which I lived for four years before moving to KY never considered it abandoned. But Ky DID after only one year of living there.

 

[Texas Proud]

My sister has a 2nd home in Wisconsin and has all of her important stuff in Texas... she makes sure she does not stay in Wisconsin long enough for residency... but she started here so it was not difficult...


I would say move everything to Fl to be sure...



OH, remember to buy something when you leave the state and keep the receipt... my sister uses her first night hotel to prove when she left..

 

[Morgan22]

I never said that it had anything to do with my move FROM KY. It happened because I lived in KY for 11 months. I was pointing out that KY seems to be hyper in regard to such things. The state in which I had the account never thought it was abandoned in all the years I had left it there. The state in which I lived for four years before moving to KY never considered it abandoned. But Ky DID after only one year of living there.

Nope. It just was because your institution had KY as the last address they could track you down to.

What happened to you is called Escheatment. The bank escheated the funds to the state since it appeared to the bank that your account was dormant. The last address on record was KY, so they had to escheat to KY. If your last known address to the bank was any other state, they would have escheated to the other state.

(I've worked for an institution where we had many uncashed checks, etc. on our books. After so many years, if the individual didn't respond to our warning letter, that is sent to the last address on file, that we were going to send the funds to the state if they did not contact us, we had to send the funds to which ever state of the last address that we had on file for the individual.
It's not that the states ever came knocking on our door and told us to send them funds for any particular individual. It's just escheatment law.)

 

[ncbill]

Kentucky is one of the few states that defines residency. According to Taxslayer, it is
This definition apparently is codified. https://statecodesfiles.justia.com/kentucky/2015/chapter-141/section-141.010/section-141.010.pdf

Florida residency is determined by your declaration of intent to reside there. You demonstrate that as indicated by ncbill”
Leaving the cars registered in Ky weakens your case. Your insurer will want to to declare a primary residence and insure based on that, and if it’s not Fl the Ky tax authority may challenge your becoming a,non-resident.

Won't be a problem if all vehicles are registered in FL.

Yes, premiums will likely be more expensive than KY, at least for the vehicles that stay in FL.

But you get charged based on where they are parked.

My oldest kid (active duty) kept his FL residency when he got moved but his auto insurance premium is based on the current location of his vehicle.

 

[MarieIG]

I never said that it had anything to do with my move FROM KY. It happened because I lived in KY for 11 months. I was pointing out that KY seems to be hyper in regard to such things. The state in which I had the account never thought it was abandoned in all the years I had left it there. The state in which I lived for four years before moving to KY never considered it abandoned. But Ky DID after only one year of living there.

I've had accounts escheat to NY State - and I was living there. Per the bank it was for "inactivity." Now I try to at least move a dollar in or out of each account one in a while so it is "active."

 

[pb4uski]

Perhaps a good reason to close out some credit union accounts that I have from about 5 years ago when the credit unions were running CD specials.

 

[badatmath]

Perhaps a good reason to close out some credit union accounts that I have from about 5 years ago when the credit unions were running CD specials.

I was contacted every year by one CU to "prove" I am alive. Checking your balance online or automatic transfers in ALSO did not count.

So now I have reminders set to do something they like. Last year I sent them a check so it was a manual process. IDK.

 

[OldShooter]

Thanks for all of the responses and advice, seems like a lot of effort for minimal savings if any. Insurance costs will be higher in Florida. Not sure I want to find all of the doctors and dentist in a very crowded state like FL. Thanks for the discussion!

Good luck. But remember that SGOTI loves to speculate, especially when he knows nothing about the subject. Lots of that here. Talk to the KY tax people, then decide whether you want to follow up by finding people who have experienced the move you are considering.

 

[The Cosmic Avenger]

I'm retired, my wife is retired
I have passive income from my portfolio
I draw SS
I occasionally accept a consultant fee from my former employer who is based in Indiana for individual assigned tasks. less than 10% of my annual income.

Based on my experience, and our company has a lot of remote workers, income is always taxed based on the state in which the work is done, not where the employer is located. Depending on state laws, technically they might expect you to file a nonresident return even if you work from another state while traveling (although that might also be hard to prove or enforce). From https://www.britannica.com/money/tax-residency-status:

If you live 100% of the time in a new state and you work 100% remotely in that state, your employer will typically consider your income as earned in your new state. You will therefore be taxed only in the state where you live and work.

But if you earn any type of income in another state during the year, you’ll need to file a non-resident tax return for that state. For example, you might have rental income from a property you own and rent on Airbnb (ABNB) or the VRBO platform from Expedia (EXPE). Or you might have income from a small business you inherited or own with a partner. Maybe you receive wages from a part-time job you take when you are living your dream life in a temporary location.

There’s even a chance that your two-week trip to another state to “work remotely” could be taxable in that state. Make sure you do some research before you plan a working vacation. Some states allow a certain number of work days before they are taxable; other states tax you the minute you answer an email in their state.

Note that if you earn income of any kind, you’ll have to report that income to your state of residency, even if you earned it out of state.

 

[MichaelB]

Good luck. But remember that SGOTI loves to speculate, especially when he knows nothing about the subject. Lots of that here. Talk to the KY tax people, then decide whether you want to follow up by finding people who have experienced the move you are considering.

Actually, there is pretty good advice in this thread, and this is not a question to ask the Ky tax authorities. They have no incentive to assist the OP

 

[SoClose]

Good information on changing

One thing holding me back from changing residence is the Federal capital gain exclusion on the sale of your primary home. Not ready to sell it yet or even within 5 years look back period. So I continue to pay minimal State income taxes, until it’s time.

I’ve not found a solution to keep the home, change residency and not incur a large future capital gains bill.

I also assume if the gain is excluded it won’t effect MAGI?

 

[pb4uski]

Actually, there is pretty good advice in this thread, and this is not a question to ask the Ky tax authorities. They have no incentive to assist the OP

+1 Many here have experience with thses issues... perhaps not KY, but other states that are fairly aggressive when it comes to state income taxes.

Talking to KY tax dept would most likely get the OP an answer that is most conservative and most in KY's best interest, but not what is possible and common practice.