Article on NY audits of Florida tax refugees

[JoeWras]

, but I considered it dodging a bullet and getting out of a headache.

Right. Where's there's smoke, there's fire. The ground underneath is swiss cheese limestone. Good that you got away from the headache.

 

[joeea]

Ummm... depends on who makes the pizza.

I suspect we define "exceptional" differently.

 

[ownyourfuture]

I think it's called prudence, not much different then making sure you don't go over the ACA income cliff. The punishment can be severe...

I just went over that cliff, & it's not a pleasant experience.
$305.00 over, turned into owing the feds $5,300.00

 

[sengsational]

Yes, let's go with that!

That would be like telling you the "punchline" of the joke first?

I occasionally see those kinds of plot tactics in books, movies and TV shows. I then do what I can to avoid said "entertainment". But your case is a bit nuanced and so a bit interesting because I imagine there's some structuring of finances and knowledge about what's discoverable by the IRS and what isn't. I'm not a candidate for being an expat, and given almost every dime I have is in some kind of tax advantaged account, no way could I do what you did. But interesting anyway.

 

[ziggy29]

My understanding is that federal law precludes them from doing that.

I think it's important to remember that IRAs and 401Ks are sometimes treated differently, because 401Ks and 403Bs are legally pension plans, whereas an IRA is not. This is why 401Ks generally have more asset protection than IRAs in many states -- federal pension laws protect DC pension plans much in the same way as DB plans. Some states, of course, grant more protection for IRAs as well but federal asset protection laws apply to DC pensions, not IRAs.

So if there is federal law concerning how pensions can not be taxed by states you worked in but no longer live in, it would apply to 401Ks and 403Bs. State law can not override it. As far as I can tell, the Pension Source Tax Act of 1996 does not apply to IRAs.

Sometimes it can work both ways, including to one's detriment. I left my last employer in June 2018. We moved from Texas (no income tax) to Oregon (top income tax rate, 9%) in July (but at least there is no sales tax). My employer finally paid out my unused vacation balance in September, for hours of leave that were entirely earned in Texas. I had to pay Oregon income tax on it anyway, because it matters when it was paid out, not when it was earned.

Still, it's interesting living so close to the Washington state line, where there is a very high sales tax but no income tax. When we go to Costco, it seems like nearly half of the vehicles have Washington plates.

 

[Montecfo]

I transferred my assets overseas before leaving NYS. I filed one last tax return with IRS and NYS for the six months I was still there. Never heard from NYS again. IRS asked me where my return was the following year, but I ignored the letter and have never heard from them again!

Well, be that as it may you still owe tax. I suspect they will find you.

 

[Montecfo]

I relocated to Florida from New York City last year. After almost 20 years in NYC, I sold my apartment and left for good.

Since I have been early retired for several years, most of my income now is dividends and interest, so I was no longer paying a ton of state and city income taxes as a resident of NYC. But, in my experience, the public services were declining significantly along with the quality of life. A homeless camp had been created around the corner from my apartment building, The subways, roads, and other services that I relied on had been declining for years.

And frankly there was a political element. I will avoid going into details about that, out of respect for the forum rules, but both the mayor of NYC and the governor have made it clear that they don’t value people like me. In fact, several years ago the governor of NY actually stated that people with political opinions like mine were not welcome in the state.

Why should I continue to give my money to people who hate me?

There is an expression I like: “Go where you’re treated best.”

So that’s what I did.

I always find it interesting when a state decides it can solve a fiscal problem by "taxing the rich", as if this is a brilliant idea that will work. I mean, it might work once.

If you are walking home from work and get accosted by bandits for a shakedown, it is sensible to take a different way home next time.

Most "rich" people are sensible that way.

 

[ziggy29]

I always find it interesting when a state decides it can solve a fiscal problem by "taxing the rich", as if this is a brilliant idea that will work. I mean, it might work once.

If you are walking home from work and get accosted by bandits for a shakedown, it is sensible to take a different way home next time.

Well, higher taxes are not necessarily a "shakedown", but when one perceives that what they are paying for is less and less than what they are getting, yes, it may be time to shop elsewhere. But if one finds that higher taxes are the price to pay for a locale which is more suited to their own ideals for what their society should be, then they may want to stick around.

The problem comes when there is a growing disconnect between taxes paid and the perceived value of what comes from those taxes.

 

[NYEXPAT]

Well, be that as it may you still owe tax. I suspect they will find you.

Well, if I do, I am sure they will send me a bill as they have my correct address!

 

[joeea]

I always find it interesting when a state decides it can solve a fiscal problem by "taxing the rich", as if this is a brilliant idea that will work. I mean, it might work once.

One person's "taxing the rich" is another person's "paying their fair share".

 

[statsman]

So a state is being aggressive about collecting taxes that are owed.

I'm okay with that.

Yep. We moved from CA to TX last fall after selling our house. Large capital gains after the $500k exemption. We are filing what we hope is the last tax return for CA since we own no other property in CA. The capital gains from the house sale, and subsequent tax bill, are there. If we had moved within the state, we would have had the same tax considerations.

 

[copyright1997reloaded]

One person's "taxing the rich" is another person's "paying their fair share".

Yes, as defined by "the people". I used to play a little game with my college classes. I would state in class that in order to make things more fair, we could institute a vote in class where the majority could decide that grade points be redistributed. I further explained that there were some members of the class that were far into the A category, and even more so since I gave bonus points there might even be people with > 100%. Wouldn't it be more fair, I suggested, that democracy rule where grade points could be taken from those who had too many to those who were struggling to pass? Nor should it matter that some of those who were struggling to pass didn't even bother coming to class or to do the assignments - but we should still have them participate in the vote.

Another variation of this is I sometimes ask if they would consider it better if I simply gave everyone an A in the class, regardless of how well they did or whether they even did the assignments.

To stretch the analogy even further, what do you think the students working hard to get good grades would do if points were taken away? Would they think that system is "fair"? What do you think they would do if they had the option to transfer to another class where their points are left to them (and not taken) or would they stay in my class where their points were given to other students?

 

[ziggy29]

To stretch the analogy even further, what do you think the students working hard to get good grades would do if points were taken away? Would they think that system is "fair"? What do you think they would do if they had the option to transfer to another class where their points are left to them (and not taken) or would they stay in my class where their points were given to other students?

The problem here (apart from the fact that we are starting to stray into the politics of taxation) is that these are not analogous situations.

In your example, the person giving up more of their "points" gets nothing of benefit in return (except, perhaps, if they feel good about preventing someone from flunking out). In the taxation example, people *might* get some benefit to giving up more of their income -- they may get better schools, parks, libraries, more filled potholes, more responsive public services (with less understaffing), and so on.

Of course each individual has to decide if higher taxes are worth it to them, considering what they are getting for it. That's what "moving with your feet" is about, and what the OP was referring to -- not the politics of tax rates.

 

[Montecfo]

One person's "taxing the rich" is another person's "paying their fair share".

Sure. But continuing my analogy, it does not really matter what you call it.

After a shakedown, the wise take a different route home.

This is why these fiscal strategies do not raise the money expected. So says Gov. Cuomo.

 

[ziggy29]

This is why these fiscal strategies do not raise the money expected. So says Gov. Cuomo.

Let's please keep clear of straying into politics and politicians. Thanks.

 

[joeea]

I used to play a little game with my college classes.

Wouldn't it be more fair, I suggested, that democracy rule where grade points could be taken from those who had too many to those who were struggling to pass? Nor should it matter that some of those who were struggling to pass didn't even bother coming to class or to do the assignments - but we should still have them participate in the vote.

How cute. That must have been a laugh riot.

Another variation of this is I sometimes ask if they would consider it better if I simply gave everyone an A in the class, regardless of how well they did or whether they even did the assignments.

To stretch the analogy even further, what do you think the students working hard to get good grades would do if points were taken away? Would they think that system is "fair"? What do you think they would do if they had the option to transfer to another class where their points are left to them (and not taken) or would they stay in my class where their points were given to other students?

Your class must have been a lot of fun. What was the subject? Did you have tenure? Was it a private or a public school?

 

[joeea]

Sure. But continuing my analogy, it does not really matter what you call it.

After a shakedown, the wise take a different route home.

Got it.

So progressive taxes are out. Because the wise take a different route home.

 

[Another Reader]

My parents were raised in California but my father took a job in Westchester County NY around late 1952 or early 53. He lasted about two years before deciding to take the southerly route back to California in the winter. For years after that, or rather decades, my mother would shake her head at "those stupid New Yorkers." High taxes, crowded, dirty old cities, and nasty weather. Who would WANT to live THERE? No bad roads or potholes in California when I was a kid. Well funded public schools, shots for kids free at the County clinic (remember polio?), essentially free public higher education and low taxes.

You can have all these things in a place where things are new, there are relatively few people and pretty much everyone has the same belief about the social contract. Once a place becomes more crowded and the infrastructure ages, all these wonderful things disappear.

There simply is not enough tax revenue to be generated in the crowded states with old infrastructure, ossified governments and overreaching regulatory environments to provide more than minimum basic services. There is no choice but to tax anything and anyone to try to keep up.

Unfortunately, there are not many new, uncrowded places any longer. California has followed in New York's footsteps and from this coast it looks like Florida is headed in the same direction. Hence the desperate search for revenue from fleeing residents by the newer states as well as the old.

California is far less forgiving in defining what makes you a resident than New York and far more aggressive in auditing former residents. My guess is that a light bulb will go off over someone's head in Sacramento soon and California will implement an estate or inheritance tax, and they will try to make it applicable to people that leave and die elsewhere. They need the money.

 

[statsman]

My guess is that a light bulb will go off over someone's head in Sacramento soon and California will implement an estate or inheritance tax, and they will try to make it applicable to people that leave and die elsewhere. They need the money.

I think the logistics of trying to make that work would be nearly impossible. For instance, I can have an interest bearing account or CD at a bank located in California, and the interest earned is not taxed in California as long as I don't have any residency status or any other type of income in California. That's true for all states.

 

[Souschef]

I was a Field Engineer in my early 20's working overseas. I qualified for "Physical Presence in a Foreign Country " and paid no taxes. It was great as I was single and had no deductions.

 

[brucethebroker]

Yep. I have friends that moved from MD to FL to retire, and now like to poke fun about Maryland's high tax rates. But then when they complain about the state of their roads and infrastructure and public services, I be sure to take the opportunity to remind them that I *chose* to live in one of the counties in MD with the highest local tax rate. That is why I can fill out an online form about a pothole or even faded lane markings and it will be fixed a week or two later!

Your friend must not use the same FL roads I do (snowbirding). Growing up in the North and Midwest, I accepted pot holes as the "rites of spring". But in a state without freezing temps and salted roads, things are quite different. Don't know that I have seen nicer roads, overall, than in FL.

 

[Dtail]

Your friend must not use the same FL roads I do (snowbirding). Growing up in the North and Midwest, I accepted pot holes as the "rites of spring". But in a state without freezing temps and salted roads, things are quite different. Don't know that I have seen nicer roads, overall, than in FL.

Amen to that.

 

[Montecfo]

Let's please keep clear of straying into politics and politicians. Thanks.

Nothing partisan about the statement. It is completely on topic and factual. It is what the article said, it even quoted Cuomo to the same effect.

 

[Koolau]

Let's please keep clear of straying into politics and politicians. Thanks.

I suppose such a discussion could easily become political. It's not always so much the fact that one state has higher taxes than another and not that some states are more aggressive in collecting taxes due (or even not due.) To me, the issue is what the taxes are used for. That could get political very quickly. Therefore I'll leave it at that as YMMV.

 

[JoeWras]

Your friend must not use the same FL roads I do (snowbirding). Growing up in the North and Midwest, I accepted pot holes as the "rites of spring". But in a state without freezing temps and salted roads, things are quite different. Don't know that I have seen nicer roads, overall, than in FL.

Agree that the physical state of roads in FL is great, primarily due to the lack of freezing.

What I hear people complain about in FL in regard to roads is traffic flow, backups, and planning.

But I also hear people complain about that almost everywhere. Maybe not Wyoming.