Taking advantage of warm winter weather is not the only attraction for retirees moving to better climates; some states such as Florida, Arizona or Tennessee can offer significant financial benefits to those establishing a new residency.
Favorable Tax Climates in Florida, Arizona, Tennessee
Notably, Florida and Tennessee residents do not have to pay state taxes on any earned or unearned income, and Arizona’s rates tend to be lower than Illinois. Florida also provides a Homestead Property Tax Exemption to its legal residents, which can decrease a property’s taxable value by as much as $50,000. Additionally, Florida residents can receive protection from valuation increases under the Save Our Homes law. For those that summer in the north, these savings can make a huge difference.
If you are a “snowbird”, you need to understand what to do – and what not to do – in order to avoid a significant tax hit. Our experienced attorneys can help guide you through the process.
What Defines Residency?
Various factors affect the determination of your residency. To satisfy any tax agencies who may challenge your claim, there are a few things you can do to be considered a resident of your new state of choice:
Buy or rent a home (at least the same size or bigger than your existing home) and spend at least 183 days in your new state of choice.
Get a new driver’s license and register your vehicle in your new state.
Update your estate plan and other important documents with your new address.
Establish yourself as a patient or client with a local doctor, dentist, CPA, lawyer, etc.
Transition your banking and move important paperwork and valuable items to a local safe or bank vault.
File your federal tax returns with your new address as your residence.
Register to vote in your new state.
File a declaration of domicile in the state circuit court of the county where you reside.
If your plans include buying or leasing a home in another state, you may need legal assistance to ensure non-residency status in highly-taxed states such as Illinois, California or New York to avoid an inheritance tax and a higher income tax. The attorneys at Kelleher + Holland, LLC can assist you with changing residency and domicile and are licensed in Florida, Arizona, Tennessee and several other states. With three locations in Illinois as well as Naples, FL, we can help make the transition seamless.
Call us or email attorneys@kelleherholland.com for a free consultation to find out your legal options.
