Change of residence and taxes in the USA: how to avoid an audit if you moved to Florida

Each year, more than 330,000 people move to Florida from other states. They leave mostly regions with high taxes, in particular, New York. From April 2019 to April 2021, 104,960 New Yorkers chose to become Floridians, including the 45th President of the United States, Donald Trump.

Residency change and US taxes: how to avoid an audit if you moved to Florida

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Why life is good in Florida

Americans go to Florida not only and not so much because of the sea and the sun, but because in this state there is no income tax (there are only 9 such in the US) and inheritance tax. In addition, Florida residents can save on property taxes with extensive benefits. Property taxes are reduced for widows/widowers; disabled, elderly people with limited incomes; military and veterans; in addition, this tax is limited if it concerns property that is your main residence (homestead).

Primary residence in Florida protected from debt collection. Creditors also cannot claim to recover debtors' income from life insurance, annuities, retirement accounts, and wages. All this attracts a huge number of people to the state who are looking for financial stability and tranquility.

For more information on tax rules for individuals and legal entities, please contact the company MICHAEL KOLODEN CPA PC: 7308 18th Avenue, Brooklyn NY 11204; tel. (718) 360-5337; e-mail: michaelkolodencpa@gmail.com.

States that will not allow you to easily move to tax haven

Your desire to change tax residence may not please the state from which you are leaving, because they do not want to lose a piece of their income. Therefore, tax officials in California, Massachusetts, Minnesota, New York, and some other income tax states are unlikely to let you go to Florida without a fight. People, including retirees, who buy second homes in low- or no-tax states and claim they have relocated may face scrutiny by tax officials in the state they left, and sometimes litigation. .

Audits in such cases are very aggressive and affect many aspects of personal and business life. The inspector will require a bank statement (it must be in Florida); information about the clubs in which you are a member; description of the property; confirmation of your permanent residence in Florida (for this, it is better to keep receipts from local stores and restaurants); bills paid in Florida, as well as evidence that your personal and valuable items have also moved (so it is better to move them to bank cells or vaults in Florida).

An important element of the verification will be doctors, lawyers, trainers, etc. If you have moved, then you should be treated by local doctors, and consult – from local lawyers. Therefore, take care of this in advance, before the auditor becomes interested in this issue.

On how to proceed in the event of an audit and how to solve other tax problems in the United States, you can consult the company's specialists MICHAEL KOLODEN CPA PC: 7308 18th Avenue, Brooklyn NY 11204; tel. (718) 360-5337; e-mail: michaelkolodencpa@gmail.com.

Residency change and US taxes: how to avoid an audit if you moved to Florida

Michael Koloden, founder of the accounting firm MICHAEL KOLODEN CPA PC. Photo from personal archive

What you need to do to prove your right to pay taxes according to Florida laws

To move to Florida, and most importantly, to transfer your tax obligations there, it is not enough just to move your belongings to a new home.

The state you currently reside in and want to leave may need some proof before it releases you and your taxes. So, here are the 10 steps you need to take to make Florida your domicile (legal place of residence where you permanently live and pay taxes):

1. Get an official ID showing a Florida address.This could be a driver's license (available from your local DMV) or a Florida identification card – for those who don't drive.

2. Enroll your kids in school in Florida. In the case of verification, the place of study of children can become a trump card – yours or the tax officer from the state you left. If your minor children do not live with you and go to school in another state, this suggests that your intentions to move to Florida are most likely not serious.

3. Register your cars, boats and other vehicles with the Florida Department of Highway Safety and Motor Vehicles. Vehicle insurance must also be obtained in your new state. p>

4. Register as a voter in Florida, this can also be done at the DMV or online.

5. If you have a business, then if possible, it should also be registered (or re-registered) in Florida. This is a great proof of the seriousness of your decision to move.

6. If you live in your own home in Florida, apply for a property tax exemption for your homestead. This is done through real estate appraisers in your area. Applications must be submitted by March 1 of the year for which you wish to receive an exemption.

7. Update your will.This advice sounds rather unexpected, but there are at least two good reasons for this. First, having a Florida address in your will and emphasizing that your estate will be administered under Florida law will help you prove domicile in that state. Second, Florida does not charge inheritance tax. That is, updating the will on the basis of Florida law will save money for your loved ones in the future.

8. Apply for a Florida Declaration of Domicile (Florida Declaration of Domicile). This document is not required, but it is an effective way to prove that you really intend to make Florida your permanent residence. An application for such a declaration can be obtained from the property appraiser's office in the county where you live. An example of a declaration of domicile in Broward County can be seen here.

9. Notify the IRS and tax authorities of the state (from which you left and to which you moved) of the change of address. It is also worth filing a final return in the state you are leaving. If you receive Social Security, tell the Social Security Administration of your new address.

10. Additional steps to demonstrate your commitment to making Florida your home will be to change your postal address on all financial accounts and service subscriptions. You should also update the address in your passport.

But all these documents will not matter if you do not live in Florida by issuing them. In most regions of the United States, 183 day rule – if you lived in the state 183 days a year, you are entitled to pay taxes under its laws.

Immediately after moving, it is recommended that you keep a record of where you are each day, in case the tax office of the state from which you left, will decide to check whether you really spent the right period of time in Florida.

For more advice on changing your tax domicile and moving your business from one state to another, contact MICHAEL KOLODEN CPA PC: 7308 18th Avenue, Brooklyn NY 11204; tel. (718) 360-5337; e-mail: michaelkolodencpa@gmail.com.

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