Can I Change My Residency to Florida to Save Money on Taxes? | Ask a Savant Financial Advisor
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Many retirees consider moving away from high-cost states such as Illinois, New York, and California for greener pastures, like Florida, in retirement. In addition to your regular living expenses like groceries and healthcare, there are many state-level taxes that vary greatly depending on where you live.
If you split your time between a high-tax state and a low-tax state, one common question is, “Can I change my residency to save money on taxes?” The answer is – it depends.
The key factor is what your tax domicile is. In the eyes of the IRS, your domicile is your permanent place of legal residency, where you intend to remain permanently, and where you return to after being away. Based on current case law, this can also be the place where your pets live!
Changing your domicile requires signaling your intent to change residency. There are several ways you can signal intent. You could get a new driver’s license, register your vehicles, register and vote, update your estate documents, file a written declaration, update your address on all of your financial accounts, update your passport, change your phone number, and spend most of your time there. Of course, you’ll also want to notify the Social Security Administration and IRS of your address change.
It’s important to note that there may be some accounts that will continue to be subject to your old state’s tax code. Employee stock options exercised in your old state may be subject to that state’s income tax. You should consult a tax professional before making any decisions.
My name is Teryn and I am a financial advisor with Savant Wealth Management. If you’re retiring soon and you’re considering making changes to your living situation, I encourage you to get in touch today. Let’s figure this out together.