Is FL residency worth it?

[trapperjohn]

I'm retired and considering changing my state of residence from Ohio where I pay about 4% income tax, to Florida with no income tax. My Ohio tax is about $15K / yr. This does not include my wife's income or Ohio tax.

My DW would continue to live and work in Ohio. I would continue to travel and stay with her, but fulfill the legal requirements to maintain residency in Florida.

To me it seems that it would be better to stay in Ohio and pay the tax, because it would cost more than $15k to establish a residence in Florida.

Am I missing something? It doesn't seem financially better to move to FL.

[Big_Hitter]

plus hurricane risk

[Ready]

Unless you have a desire to live there, I can't imagine why you would go to all that trouble.

[aaronc879]

If $15K is 4% of your income then $15K is pocket change. I wouldn't bother changing residency.

[RunningBum]

Quote:

Originally Posted by aaronc879 If $15K is 4% of your income then $15K is pocket change. I wouldn't bother changing residency.

I agree. That says you're making $375K. Is $375K rather than $360K (minus fed taxes in both cases) worth it?

I thought you have to spend more time in FL than any other state to be considered a resident, or is that not true? A friend of mine got legal advice on establishing residence in a tax-free state, and one piece of advice was to cut all ties with your former state, including selling all property. Your wife staying in OH does not seem to fit. Maybe you'll get away with it, but again, for 4%, do you want to risk getting charged with tax fraud? Or go through all the work so that it's not tax fraud?

If you like the idea of living part of the time in FL, that's a different story.

[aaronc879]

Quote:

Originally Posted by RunningBum I agree. That says you're making $600K. Is $600K rather than $585K (minus fed taxes in both cases) worth it? I thought you have to spend more time in FL than any other state to be considered a resident, or is that not true? A friend of mine got legal advice on establishing residence in a tax-free state, and one piece of advice was to cut all ties with your former state, including selling all property. Your wife staying in OH does not seem to fit. Maybe you'll get away with it, but again, for 4%, do you want to risk getting charged with tax fraud? Or go through all the work so that it's not tax fraud? If you like the idea of living part of the time in FL, that's a different story.

My math says it makes his income $375K? Either way....

[RunningBum]

Quote:

Originally Posted by aaronc879 My math says it makes his income $375K? Either way....

It sure is! I thought I was good with numbers. I've fixed my post. Thanks!

[Bamaman]

You can be a Floridian--when it's time.

[meierlde]

Note in addition having spouses with different states of residence makes doing income taxes more complex even if one state does not have an income tax. Your federal return would be joint and her Ohio return would have to be single. How you divide income on jointly held assets would be a big problem.

[braumeister]

Quote:

Originally Posted by meierlde Note in addition having spouses with different states of residence makes doing income taxes more complex even if one state does not have an income tax. Your federal return would be joint and her Ohio return would have to be single. How you divide income on jointly held assets would be a big problem.

Ohio requires you to file joint if your Federal return is joint.

[Mulligan]

On top of the above, unless your ultimate plans included her joining you real soon in FLA on a permanent basis I see how no savings occurs at all in this scheme when accounting for frequent travel to visit, additional costs of a second place, utilities, etc.
While on a lower scale of about 100k in yearly income, I did some number checking. I live in a 6% state income tax and found moving to FLA would save me no money at all when using complete honest math.


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[MBSC]

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

I researched this from the angle of a single person.

When you apply for a FL driver's license you also register your vehicle in FL and FL auto insurance rates are higher than my current location. You pay the FL sales tax rate when you buy a new car.

At a minimum, my current property tax and homeowner's insurance would increase as it would be listed as a vacation home. I would lose the savings associated with it being a primary residence.

Would you be comfortable with income tax, financial and utility companies listing your physical address as one provided by the mail forwarding business?

I assume your health insurance coverage is through Medicare or your DW employment and you would still qualify. If you have an exchange plan, you would be required to purchase a FL exchange plan. If it were an HMO, routine care in Ohio could be out-of-network and emergency care could be balanced billed.

[H2ODude]

Have toyed with the idea of returning to FL and part of the equations was the income tax. Recently spent 5 weeks at a friend's home there in northeast Fl. DW and I looked at a home we really liked, 10 minute walk to the beach. We pay about $10k in NC income tax and all but 4 of that would be eaten by property tax, admittedly home was pricier. Add in $2k more in homeowners and IIRC the price of car insurance was vastly higher in FL when we left, and it was a wash. When the minimum withdrawals kick in on the IRA it might push it more, but still.

We might still do something along those lines but taxes won't be the reason.

[HadEnuff]

I have looked at the same option vis. a vis. NY State Income tax. my income is nowhere near enough to make it worth it unless I also wanted to live there for most of the 185 days/year I'd need to to make my residency Floridian.

My Dad lived in Ohio, and wanted to do this, as he and Mom had a home in Fla. however my Mom nixed the idea because she flat out refused to be in Florida for those hot months.

Which, BTW, to the OP, made me wonder if you could avoid Ohio residency with your wife continuing to be in Ohio enough days to continue her employment there. My guess is that you could not.

[trapperjohn]

First, thanks for all the replies. You've confirmed my thinking on the subject.

Second, yes, we want to live in FL some day, but my wife does not want to retire yet. We are comfortable living apart for long periods of time because I did that when I was working.

Third, if we did this, our filing status would be married filing separately for both fed and state. The numbers I quoted are for my income only, including Roth conversions which I have going on.

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.

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[Dash man]

We're changing our residency to Florida by the end of the year from PA. But we chose to live half the year in a beach condo we bought and DW is done with work completely in November. We'll save on income tax and the kids will save a bundle on a punishing inheritance tax. Our banks and brokerages are all online so a change of address will be easy. Car insurance may go up but changing our homestead to our FL condo will lower property taxes more there than they will be raised in PA by removing our homestead. We can keep both properties without a problem. We'll join a church in Florida but also maintain a relationship with our FL church in the summer months. Car registration, drivers license and voting changes will be after the election. We'll still have to file a yearly PA income tax for our rental property, but will turn management over to a property manager.


Enjoying life!

[Big_Hitter]

if you are making 375K, the 15K "savings" you may recognize is chump change compared to the move and having to live in FL

[clobber]

Just to be pedantic: since this discussion revolves around the tax implications of various scenarios, I believe you need to understand domicile vs. residency. Most state tax booklets say that you have to pay taxes in that state when you are domiciled in the state. The two are similar, but not exactly.

[trapperjohn]

Sooo, when we're talking about FL which has no state income tax, what is the difference between a domicile and a residence?

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[Big_Hitter]

Quote:

Originally Posted by trapperjohn Sooo, when we're talking about FL which has no state income tax, what is the difference between a domicile and a residence? Sent from my SM-G900T using Early Retirement Forum mobile app

permenancy