Personal income tax

[Sprink-Fitter]

Is there a way to stay living in Minnesota when I retire but have my address in South Dakota to save on taxes? I know if you live full-time in a RV they sometimes have there home address in South Dakota with a mail service getting the mail in South Dakota.

 

[pb4uski]

There may be if you are willing to risk spending part of your retirement in prison. Where will you be spending your time?

 

[RunningBum]

You could try the Steve Martin "I Forgot" defense.

 

[COcheesehead]

Is there a way to cheat on taxes and not get caught? Asking for a friend.

 

[Stormy Kromer]

I live in MN and know MANY people, including two on the Forbes 500 list who live in SD and fly to work in MN every day. They sleep over 185 days in SD each day and are legal SD residents. Sioux Falls airport has more than a few private jets coming and going every day for this reason. There is a nice airport in the Miller/Highmore area because the highest paid executive in the US worked in MN and had a ranch there that he called home. Saving 8% state income tax on $500 million a year paid for his private jet. MN has a very high income tax rate and treats capital gains as ordinary income. They also have a very high inheritance tax. I am a lifelong resident of MN and am seriously considering moving for these very reasons. But if I change residencies, I am really going to move, not just pretend.

 

[COcheesehead]

I live in MN and know MANY people, including two on the Forbes 500 list who live in SD and fly to work in MN every day. They sleep over 185 days in SD each day and are legal SD residents. Sioux Falls airport has more than a few private jets coming and going every day for this reason. There is a nice airport in the Miller/Highmore area because the highest paid executive in the US worked in MN and had a ranch there that he called home. Saving 8% state income tax on $500 million a year paid for his private jet. MN has a very high income tax rate and treats capital gains as ordinary income. They also have a very high inheritance tax. I am a lifelong resident of MN and am seriously considering moving for these very reasons. But if I change residencies, I am really going to move, not just pretend.

The Forbes 500 is a list of companies, not individuals.

 

[Clone]

They sleep over 185 days in SD each day and are legal SD residents.

There are a number of tests for determining residency. Where you own property and where you spend your time is a big part of it. There have been folks from other states who have tried to use the SD residency but got nailed because they still maintained a home in their original state, or voted there, or their kids were in school there.


Folks have asked if we were going to move to MN when we retired- No Way!! The taxes are part of it. I have looked at residency in a couple different states, and it looks like maybe a $3000 /yr possibility for us.

 

[audreyh1]

Is there a way to stay living in Minnesota when I retire but have my address in South Dakota to save on taxes? I know if you live full-time in a RV they sometimes have there home address in South Dakota with a mail service getting the mail in South Dakota.

Pretty much no. If your residence is in Minnesota and you live there most of the year it's going to be tough to convince the powers that be that you are not in fact a resident.

 

[audreyh1]

The Forbes 500 is a list of companies, not individuals.

Forbes has a list of the 500 Richest People In The World

There is also a Forbes 400 richest Americans list.

The list of 500 companies is the Fortune 500 list? Fortune has a Global 500 and a America's top 500 list.

 

[ziggy29]

Is there a way to cheat on taxes and not get caught? Asking for a friend.

Ha! Pretty sure you are saying this tongue-in-cheek.

But to speak to the OP, I don't think they are necessarily asking about how to cheat on their taxes, but rather if there are any legal loopholes or laws which might help alleviate the tax burden. I don't think the OP is asking for help in tax evasion, but rather, tax avoidance. And for me, the short answer is that I don't think there's a way to do that but I am not proficient in South Dakota or Minnesota tax law, but if they are like most states, where they live for most of the year is where they are considered a resident. If you legitimately live in different states in a year you can file part year resident returns, but I don't think that's the question here.

 

[COcheesehead]

Forbes has a list of the 500 Richest People In The World

There is also a Forbes 400 richest Americans list.

The list of 500 companies is the Fortune 500 list? Fortune has a Global 500 and a America's top 500 list.

https://en.m.wikipedia.org/wiki/Forbes_500

 

[marko]

Half of my neighbors here in (no income tax) Florida are 'from' Mass or NY. It's bit tricky but they must spend more than 6 months here (185 days), have a permanent mailing address and usually need a FL driver's license and vote locally.

You can't just say you live in another state if you've lived elsewhere for years.

Lawyers advertise on TV/Radio down here on how they can help. While I could likely qualify, my legal address is Mass but I'd save about $10K in income taxes if I 'moved' down here. I've heard that even then, Mass won't let you go easily from their tax rolls.

 

[socca]

Is there a way to stay living in Minnesota when I retire but have my address in South Dakota to save on taxes?

Call the Minnesota Department of Revenue helpline and ask the agent whether there is any way for you to enjoy everything MN has to offer without paying any state taxes. I'm sure that the friendly agent will be happy to assist you.

 

[Stormy Kromer]

There is a very prominent person in MN who has a family trust in South Dakota, he may be able to tell us how it's done. He lived 8 years in the Governer's Mansion, before that he was one of our Senators. He paid MN state income tax on his governor's salary, I'm not sure about the family trust income in South Dakota. His family set that up years ago.

 

[imoldernu]

Please don't be mad at me, but we haven't paid income taxes since 1995.

Up until this year, we always filed, but because of being retired and the way we structured our retirement funds, we never had to pay either Federal or State taxes. Of course this also means that we don't have scads of money, and almost all is in tax deferred instruments.

This year we didn't have to file. FWIW... some of the basic reasons for those who must pay taxes:

Certain groups of people who meet specific criteria don't have to pay income taxes. For example, if you're single, under the age of 65, and your yearly income is less than $12,000, or married, under 65, with income less than $24,000, you're exempt from paying taxes. If you're over the age of 65, single and have a gross income of $13,600 or less, you don't have to pay taxes. Or if you're married and over 65, you can earn up to $25,300 before paying taxes [source: Rose. (These figures are for 2019 or the 2018 tax year.)

More here from turbotax:
https://turbotax.intuit.com/tax-tips/retirement/when-does-a-senior-citizen-on-social-security-stop-filing-taxes/L53Hx1v9W

P.S. Hint: If you have cash buried in the backyard, be sure it is in a moisture free, sealed container.

 

[Spock]

I can tell you the practice is not uncommon. Being from SD, we occasionally attempt to start small talk with people who have SD license plates on their vehicles.
SD license plates are coded to indicate which county the vehicle is licensed in. It doesn't take long to determine who has never lived there when they don't know a thing about the area. About 1 in 10 parking lot conversations are with somebody who is actually from SD.

 

[footenote]

Call the Minnesota Department of Revenue helpline and ask the agent whether there is any way for you to enjoy everything MN has to offer without paying any state taxes. I'm sure that the friendly agent will be happy to assist you.

+1 Love living in MN and privileged to pay taxes here. Don't like the taxes? Get active politically to get them lowered or MOVE

As the kids used to say, "Bye, Felicia"

 

[marko]

+1 Love living in MN and privileged to pay taxes here. Don't like the taxes? Get active politically to get them lowered or MOVE

In Mass they went the other way:
We voted to reduce the income tax and it passed.

But there was such an outcry about it --people wanted to pay the higher rate for social programs--that they now put a box where you can voluntarily pay the old, higher rate.

Last time I looked however, only about 1200 people actually do that though; a very small fraction.

 

[Spock]

30 years or so ago, the state of MN was sabre-rattling that 401k contributions made while working in MN would be subject to MN income tax regardless of which state you lived in when when you started making withdrawals.


We both grew up in an income tax free state, still have 90% of family and in-laws there, and will eventually have interest in rentals there. When its time for RMDs we'll be residents there again.


The income will be from investments around the country/globe, banked electronically in another state, with a brokerage in another state, and none of it will be "earned income", so which state did I really have the income in and should have a claim to taxing it? (rhetorical).

 

[bongo2]

I live in MN and know MANY people, including two on the Forbes 500 list who live in SD and fly to work in MN every day.

From the brief description you give those people are absolutely subject to MN income tax. While MN does not give any reward for reporting tax fraud it's still the right thing to do.

 

[Crabby Mike]

This thread has rekindled my curiosity about a piece of this issue: how do states track/determine how many days a year you live somewhere? As of now, we split our time between homes in two states, but have no desire to change our official residence. But if we ever did, how would a state audit our claim about where we spent the most time? And what if we didn't live more than half the year in any one state?

 

[RunningBum]

This thread has rekindled my curiosity about a piece of this issue: how do states track/determine how many days a year you live somewhere? As of now, we split our time between homes in two states, but have no desire to change our official residence. But if we ever did, how would a state audit our claim about where we spent the most time? And what if we didn't live more than half the year in any one state?

I split a few years between TX and VA. I made sure I spent at least 183 days in my TX residence, had my car registered there, voted there, filed my taxes with the VA address, etc. But I did have a home in VA, and also had a Miata I kept in VA so it was registered there. One year I got a tax bill from VA saying that I owed them taxes, which they based on their full tax rate on my federal return income. They said I had used a VA address for filing, which I'm sure I didn't. I think they picked up the car registration, or taxes on the house, or both. I sent a letter that explained I was a less than half-year resident, and was prepared to go into detail if needed. I never heard anything back.

So I think states may do some audits and send bills to likely people, and not worry about if they are wrong. I don't feel like I would've had any issues even if I'd have had to go in person to prove it, and could've given them the dates I was in TX, but people truly doing it as a dodge might. I remember once going to vote in a school board run-off election in TX just as another proof of time I was in TX.

 

[sengsational]

I'm not sure this is true, since it came to me second-hand, but there was report of a state using credit card records to prove that someone was in their state for over half the year. So even though residence was established in the no-tax state using car registration, driver's license, voter registration, etc, that was ignored by the state that identified continuous spending in their state for over half the year. I suspect that the judge (if was even decided in court), presumed that if you spent money on Monday, Wednesday, and Saturday, you were in-state the whole week.


I think the key is to break all ties with the state you're leaving. So keeping a rental property there or something like that will lead to inscrutable disagreements. If the state you're leaving realizes it would be an uphill battle to collect anything from you, they probably won't waste their time. That won't stop them from sending a demand letter for taxes "owed", but you just send back a well-documented response that states that you're no longer a resident and that if they have proof to the contrary, you'd need to see it before paying any taxes. That might shut them up. Or it might just mean they leave the case open. Apparently some states are worse than others in this regard.

 

[audreyh1]

This thread has rekindled my curiosity about a piece of this issue: how do states track/determine how many days a year you live somewhere? As of now, we split our time between homes in two states, but have no desire to change our official residence. But if we ever did, how would a state audit our claim about where we spent the most time? And what if we didn't live more than half the year in any one state?

TX doesn’t go by number of days present each year. If you have a TX domicile- even if rented occasionally, you can declare TX residency. You should have your vehicles registered in TX, a TX driver license, TX voter registration, and TX insurance on everything.

 

[REWahoo]

TX doesn’t go by number of days present each year. If you have a TX domicile- even if rented occasionally, you can declare TX residency. You should have your vehicles registered in TX, a TX driver license, TX voter registration, and TX insurance on everything.

You forgot to mention the annual requirement for a minimum of 6 fire ant stings.