Is FL residency worth it?

[RE2Boys]

Fourth, I'm not sure that you have to cut all ties to your former state. I know a number of snowbirds who live at least 185 days / yr in FL, but live the hot summer months in OH. They've been doing this for years. They own a condo in FL. Theirs cars are registered in FL and they have FL drivers licenses. They probably have other FL registrations and ties. But they also still own their OH home. They are not physically in FL for all 185 days because they travel.

Doesn't mean the other folks are legally off the hook, just that their domicile hasn't been challenged.

Remember, it is the state of Ohio that may challenge your choice of domicile, it is their rules that should be of primary consideration.

Here's a link that provides some info:
Ohio Department of Taxation > ohio_individual > individual > information_releases > it200708

 

[RunningBum]

Fourth, I'm not sure that you have to cut all ties to your former state. I know a number of snowbirds who live at least 185 days / yr in FL, but live the hot summer months in OH. They've been doing this for years. They own a condo in FL. Theirs cars are registered in FL and they have FL drivers licenses. They probably have other FL registrations and ties. But they also still own their OH home. They are not physically in FL for all 185 days because they travel.

I'm not sure of this either. I'm just passing along what I remember from a letter a lawyer sent to a friend of mine on this topic. I should also add that he was looking to exercise employee stock options in the new state. This adds another twist, that his old state (not Ohio) might still consider that that state based income, and if he still had a presence in the state they might be more likely to come after him. I specifically recall the lawyer suggesting he cut all ties, and making clear the intention to move completely away from the state, and not be a one year move away to claim a large chunk of income and then move back. The lawyer went on to say that he certainly could move back in the future, but should not be doing things like keeping his house, doctors, etc, to make this easier and look as planned.

Your case, simply moving more than half time (assuming that is your plan), but not full time, to Florida, is probably pretty common, and accepted. Less common is your wife staying behind. I guess that probably doesn't matter if you file separately and you follow the residency rules.

 

[trapperjohn]

Research how full-time RV'ers establish FL domicile without owning land or renting. There are mail forwarding services that will walk you through the process at a low annual cost.
Example: https://www.sbimailservice.com/index.html

This is an interesting scenario, but not quite what I was thinking of doing. The full-time RV'ers don't have a physical residence, so they are using a service to forward their mail.

Although I don't think my scenario would work out, I was thinking of either renting or owning a residence in FL. But, as I said, I don't think it would work out financially.

Thanks, though, for the links.

 

[trapperjohn]

trapper, are you certain that the married-filing separately would exempt you if your wife is still a resident?

Yes as long as other criteria are met. See my response to RE2Boys below.

 

[trapperjohn]

Doesn't mean the other folks are legally off the hook, just that their domicile hasn't been challenged.

Remember, it is the state of Ohio that may challenge your choice of domicile, it is their rules that should be of primary consideration.

Here's a link that provides some info:
Ohio Department of Taxation > ohio_individual > individual > information_releases > it200708

Thanks for the link to the OH tax code. I read it, and it appears that I would qualify. According to the tax code:

An individual is irrebutably presumed not to be domiciled in Ohio for any portion of the taxable year if the individual meets all five of the following criteria:
(i) The individual has less than 183 contact periods [consecutive 2-or-more-day periods] in Ohio during the taxable year,
(ii) The individual has at least one abode outside this state during the entire taxable year (the law does not define “abode”),
(iii) The individual did not change domicile from or to Ohio during the taxable year (referred to as a part-year resident in the instructions to the form IT 1040),
(iv) By May 30 of the immediately succeeding calendar year the individual files the affidavit of non-Ohio domicile,(7) and
(v) The affidavit does not contain any false statements.

There is no requirement in the qualifying criteria that the qualifying criteria must be met by both spouses if they are "married filing separately"

Still, it's one thing to do something like I was considering because I would qualify under the law, and another thing to do something because it makes financial sense.

The bottom line, I believe, is that it is less expensive for me to stay in OH and pay the taxes, rather than try to establish residence/domicile in FL with all of it's associated expenses.

Still, thanks for the links.

 

[aza455]

OP,

Keep in mind that you would not be saving $15K in taxes. In fact, unless you are in AMT, the $15K in state taxes is federally tax-deductible and in your tax bracket it would be at least 28% reduction in "savings". So, it is more like $11K after the deduction.

 

[harley]

When we became FL snowbirds (from VA) we changed residency to FL to save the income taxes. However, after dealing with the higher auto insurance and MUCH higher home insurance, it wasn't that big of a savings. It was still worth it to us because by not having a customer in the state where my business is makes the sales tax situation much less complicated. But after reading your situation there's no way I would do it. It's just not worth the effort.

By the way, the limitation on how much time you can spend in the non-FL state is determined by the non-FL state. FL doesn't care whether you show up or not. They/we would probably prefer if you didn't.

 

[45th Birthday]

We became permanent Florida residents partly to save income taxes, but mostly to avoid estate taxes and because we wanted to be somewhere warm in the winter. The extra costs of another home and higher property insurance (car and home) will eat away any and all savings on annual taxes. However, for us the estate tax savings would pay for many years of even much higher expenses. I would advise anyone looking to change tax domicile who would be walking out of their current state with a bunch of money to talk to an attorney who specializes in this area in their home state.

 

[MichaelB]

When we became FL snowbirds (from VA) we changed residency to FL to save the income taxes. However, after dealing with the higher auto insurance and MUCH higher home insurance

Harley, how does residency affect homeowners insurance?

 

[harley]

+1 Estate taxes. Forgot about that.

 

[harley]

Harley, how does residency affect homeowners insurance?

Residency doesn't. Owning a home in FL does. You'd have the same problem if you owned a home and didn't become a resident.

Because of the hurricanes and the fact that no major reputable insurer will do business in FL we were forced to go with one of the smaller companies that do insure in FL. And they charge an arm and a leg in comparison to what we've experienced in VA and MD and NV. We're paying more than half as much in FL for a 1200 sq ft home as we do for a 4800 sq ft home on the Eastern Shore of MD, a location that has it's own insurance increases. It's just very expensive for crappy insurance, and eats up a significant portion of the savings on the tax on our (admittedly low) income. Other people's MMV.

 

[MichaelB]

Residency doesn't. Owning a home in FL does. You'd have the same problem if you owned a home and didn't become a resident.

Because of the hurricanes and the fact that no major reputable insurer will do business in FL we were forced to go with one of the smaller companies that do insure in FL. And they charge an arm and a leg in comparison to what we've experienced in VA and MD and NV. We're paying more than half as much in FL for a 1200 sq ft home as we do for a 4800 sq ft home on the Eastern Shore of MD, a location that has it's own insurance increases. It's just very expensive for crappy insurance, and eats up a significant portion of the savings on the tax on our (admittedly low) income. Other people's MMV.

I misread your post. Totally agree with you about FL homeowners insurance.

 

[redduck]

Is FL residency worth it?

Knowing nothing of the topic (except what I've read in this thread--and I didn't comprehend all of it, anyway), I'd say, "Ah, you know, it doesn't seem to be worth it."

 

[Sunset]

We became permanent Florida residents partly to save income taxes, but mostly to avoid estate taxes and because we wanted to be somewhere warm in the winter. ..... I would advise anyone looking to change tax domicile who would be walking out of their current state with a bunch of money to talk to an attorney who specializes in this area in their home state.

I never considered that moving my brokerage account home address or my Bank home address would be affected in any way by the State I'm leaving.

Can you explain how a State affects me leaving with my $$$$

 

[braumeister]

A silly anecdote you might find amusing:

I was born and raised in NYC, where there is not only a state tax but a city income tax. While I was in the military, some years after leaving NY, I unexpectedly found myself assigned to NYC for a one year tour. I was annoyed that I would have to pay a lot of tax again, so I considered what to do.

I sent a letter to Broward County, where my grandfather lived, explaining my dilemma and asking if I could use his address as my legal residence since I intended to live there after retiring from the military.

I got a nice letter back from the county, saying that I should simply register to vote there (using "courthouse precinct" as my address) and all would be well.

I did that, and voted (absentee) in Broward County for the next 15 years.

I never had any pushback from New York about taxes, even for the 12 months of that assignment.

The fact that I had about 15 different "permanent" addresses during 20 years may have had something to do with it.

 

[devans0]

On my Buck it list, I have some travelling planned. It begs the question, what if I am not in any state long enough for residency. For example, a few months in Mexico, Canada, Montana, and several other states that beckon.

Does that evade taxes to all states? State taxes are high enough that that could fund a retirement.

 

[trapperjohn]

Devans0, you may want to review an earlier post in this thread by MBSC. They posted a link to a story by a full time RV'er who traveled all over the country. She established FL residency very quickly. The story can be found at ://www.escapees.com/life-on-the-road/domicile-and-mail/getting-started/helpful-articles?view=entry&id=1125


Sent from my SM-G900T using Early Retirement Forum mobile app

 

[mpeirce]

I doubt the OP would benefit much from making the change.

But I once worked with a guy that I had hired as a consultant. He was generally good to work with, but one day he up and disappeared. A few weeks later he called and explained what had happened: he held a noticeable interest in a company that had been slowing dying, but owned some interesting technology. He had just learned that it was being bought for a considerable sum, so he had moved himself to Nevada (from California) the day he get got wind of the deal. The fact that Nevada had no income tax and California had a substantial one motivated him. He saved a bundle.

 

[Markola]

All I know is, one tends to get what one pays for, with the happy exception of mutual fund fees.

 

[H2ODude]

All I know is, one tends to get what one pays for, with the happy exception of mutual fund fees.

I tend to agree. Figure in quality of schools, parks, infrastructure, it all takes money. However, there are places where you have to wonder what they're doing with the revenue.

 

[45th Birthday]

I never considered that moving my brokerage account home address or my Bank home address would be affected in any way by the State I'm leaving.

Can you explain how a State affects me leaving with my $$$$

I didn't mean this literally. I meant that if you are a large taxpayer in a state and suddenly stop paying, you will attract more attention than someone who doesn't pay as much.