How to Save on Taxes by Claiming Florida as Your State of Residence
How to Save on Taxes by Claiming Florida as Your State of Residence
Snowbirds will have their work cut out for them in proving Florida is their primary residence for over half of the year.
Question:
I live out of state, but if I buy a second home in Florida, can I count Florida as my residence for state tax purposes?
Answer:
Perhaps. Claiming Florida as your permanent residence could save you a lot of money! We have no income tax (one of only 7 states), while many other states have relatively high state income tax rates. It’s not that easy to do, however, and tax officials in states with large snowbird populations – particularly New York and Minnesota – are getting very aggressive in going after people they consider taxpaying residents.
While state laws may vary, you need to prove that you intend to make the low- or no-tax state your permanent home. An easy way to do that is sell your northern home and move down here to Florida. But for most people, it’s not that simple. If you wish to keep the northern home in your family, or return at various times of the year, you’ll need to keep fastidious records that will document and demonstrate your adoption of Florida as your new state. And that’s where it gets sticky…you have to prove it!
The basis for most state definitions of residency for tax purposes is to show that you spend at least 183 days (more than half the year) in Florida. And don’t expect the state’s tax auditors to just take your word for it – you need to keep a log or diary of the number of days you spend in each state during the year. In the past, you could get away with showing plane tickets, but not anymore, since now auditors claim that such tickets don’t document all the days in-between the dates on the tickets. So log, log, log…
You’ll also need to show that you’re committed to your new state. You should register to vote here, and if you receive a jury summons, show up and do your civic duty. Get a library card and change your driver’s license and car registration. You’ll also reap rewards if you connect with healthcare providers in your new location (and document the connection). Some more ideas to show your commitment: open a local bank account, keeping ATM receipts; shop locally – state tax auditors may review your credit card records to see where you were during the year; and it helps to order items from – and have them shipped to – your Florida home. You can also show your intent to live in Florida by filing a Declaration of Domicile with your local county court; in that case, Florida itself would be helping you prove your residency.
So far, most of the info has been about establishing a new residency in Florida and documenting it, but you also should start cutting ties with your old state. Avoid taking benefits available only to that state’s residents, like a homestead exemption for property taxes on your first home. Claiming homestead exemption in your previous state alone could show you’re still a resident, and thus, owe taxes. Something as simple (and easy to forget) as checking the ‘resident’ box on a state fishing license in your other state could be a giveaway that you don’t really intend to claim Florida as your primary home.
Good luck with all your efforts, and if you show me you’ve done many of these things, I’ll roll out the welcome mat for you! And happy fishing, golfing and sunshine!
Here at TaxProblemSolver.com, we’re available to help you effectively transition to making Florida your primary residence. If you have any questions, email me at larry@taxproblemsolver.com and I, or one of my Tax Problem Solver Team, will help you with whatever’s going on. Let’s make taxes work for us rather than the other way around!
About the Author Larry Heinkel J.D. LL.M
Larry Heinkel is a tax and bankruptcy attorney with more than 38 years experience helping businesses and individuals, solve their state and federal tax problems. Mr. Heinkel has been extremely successful in representing his clients before IRS and DOR, and is known throughout Florida as an expert in tax problem resolution.
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