Snowbirds and Florida Taxes
For many people, it would appear that snowbirds lead the perfect life. During the winters they head south to avoid the cold temperatures and snow, then when the heat and humidity of Florida kick in, they travel back north and enjoy milder summers there. However, there are a few snags to living this lifestyle, and one may be failing to handle taxes properly. That’s why if you are a snowbird, it is important to talk to an estate planning and tax attorney to know exactly how your taxes and estate need to be handled.
Residency Status
When it comes to paying taxes, domicile status takes top seat. A domicile is defined as the place that you consider your permanent home. If you have lived in one area for a long time, changing this status will take a few proactive steps. While Florida is a no-income tax state, many states still charge state income tax and will be reluctant to let you leave.
Where Do You Spend Over Half of Your Year?
In most cases, the biggest consideration in determining your domicile is how much time you spend in a certain place. To claim that you are a permanent resident of a state, you will typically be required to spend at least 183 days of the year in that state. This can be hard to prove in some cases and may depend on the day that you travel back and forth. Tax auditors are tricky and have been known to search for credit card receipts from purchases to prove that you were in a different state.
Proving Your Domicile Location
An experienced attorney that deals with taxes and snowbirds will be able to prove to tax authorities where your domicile actually is. Changing your address on the below documents can help provide more leverage:
- Driver’s License
- Car Registration
- Voter Registration
- Bank Accounts
- Passport
It can also be helpful to have memberships to clubs, religious groups, libraries, etc. in the domicile of your choice. Understand that the more substantial your income is, the less likely a state is going to be to let you go without a fight. It isn’t uncommon for state investigators to pull out all the stops. In fact, one state even tried to convince a judge that having a burial plot in their state meant that the person had to consider that state their domicile.
Have an Attorney Assist You
In most states, the tax information is shared with the IRS, so if your preferred domicile isn’t listed on your federal tax form, it is likely that the discrepancy will get noticed. While state governments are aware that snowbirds make temporary moves to Florida due to the weather, they also know that this is sometimes because a large taxable transaction is being made in a no-tax state. For this reason, some states with high-taxes have a look-back period. This means that if you return to live in such a state within six years, you could be accused of trying to buck the system.
If you are a snowbird and want to avoid having issues with your taxes, it is important that you contact an experienced estate planning and tax attorney. Tampa estate planning attorney David Toback has years of experience dedicated to such matters and can assist you in handling your personal matters legally. Contact us today to schedule a consultation.
Resource:
archive.flsenate.gov/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.17.html
https://www.davidtobacklaw.com/do-i-really-need-an-attorney-to-create-my-estate-plan/
