Moving Residency for Tax Purposes - Anyone Done This?

[Anonymous]

Because OP is planning to keep their place here, no doubt will be here quite a bit, will continue to rely on our services, but wants to avoid paying taxes. Then they'll complain about how things are here, without putting their money where their mouth is. Not to mention they're likely to cheat and be here more than six months a year.

When doing your math, OP, don't forget you lose the homestead exemption on your house, the opportunity for a 50 percent reduction in your property taxes through the senior citizen discount, the right to register your car here and get zoned parking, etc. etc. etc. Plus it's just a shitty thing to do to the city and it makes you a cheapo. If you have to change your residency to avoid city taxes you're not comfortable enough to retire.

Yes, we have a second home in a much more friendly tax state. No, we don't consider this.

So don't all these arguments also apply to the state where OP will spend MORE TIME than they do in DC? Based on your analysis, that is the state that should get OP's tax dollars.

[Anonymous]

Anonymous wrote:We've lived in DC for almost 30 years. Youngest DC to graduate from high school in two years. We own a vacation home in another state with much lower tax rates.

Considering changing residency, but not selling DC SFH. As I understand it, as long as we spend 6 months in vacation home state, we can claim residency there. This will obviously be more doable as empty nesters.

Has anyone here done this? Just wondering how complicated the process really is.

thinking about doing same thing to have NOrth Carolina as residence. property tax is 1/10 fairfax property tax.

but seems since married we have to BOTH get north carolina drivers license , or we would have to file married filing separate which would be another host of issues.

so working on DW to make the switch.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My friend moved to FL the year before he sold his company (it helped the kids had just gone off to college). He saved over $500k in VA income taxes by doing so, in the year he sold his company.

But then he had to live in Florida!

this is a positive result. no longer have to deal with self centered lawyers.

[Anonymous]

Look up the tax residency “teddy bear test”. You need to make a legitimate and permanent move to give up your tax resident status in the high tax state. Move your doctors and dentist appointments to the new state, if you do church or volunteering start do that in the new state, etc.

[Anonymous]

We're following OP's plan. But I have questions.

We want to try this new model of "transitional retirement." So for two years after our move, we'd continue to work. Just from a lovely beach town in North Carolina.

My husband's company has North Carolina operations, and would let him work from our home there. He'd come back and forth to our Bethesda home as needed but be careful not to be back here more than 183 days. Is it safe to assume that if he find some urgent need to spend a few more days than that, he can stay in a DC hotel rather than our Bethesda house, and Maryland can't say anything about it?

As for me, I'll probably get a part-time job or maybe a remote one. But I think my current employer might ask me to stay on as a part-time consultant. If I agree to that, I'll still need to be back in Maryland a fair amount.

Do I need to make sure that my days in Maryland are the exact same as my husbands? Do we both just track and make sure that together we're not totaling up a combined 183 days?

All this is a little complicated. But we're really excited about getting out of the DC area full time for a few years. And then coming back when our kids start having kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My friend moved to FL the year before he sold his company (it helped the kids had just gone off to college). He saved over $500k in VA income taxes by doing so, in the year he sold his company.

But then he had to live in Florida!

Not really. He just had to *not* be in Virginia.

[Anonymous]

Anonymous wrote:We're following OP's plan. But I have questions.

We want to try this new model of "transitional retirement." So for two years after our move, we'd continue to work. Just from a lovely beach town in North Carolina.

My husband's company has North Carolina operations, and would let him work from our home there. He'd come back and forth to our Bethesda home as needed but be careful not to be back here more than 183 days. Is it safe to assume that if he find some urgent need to spend a few more days than that, he can stay in a DC hotel rather than our Bethesda house, and Maryland can't say anything about it?

As for me, I'll probably get a part-time job or maybe a remote one. But I think my current employer might ask me to stay on as a part-time consultant. If I agree to that, I'll still need to be back in Maryland a fair amount.

Do I need to make sure that my days in Maryland are the exact same as my husbands? Do we both just track and make sure that together we're not totaling up a combined 183 days?

All this is a little complicated. But we're really excited about getting out of the DC area full time for a few years. And then coming back when our kids start having kids.

Correct…you just have to not be in MD for 183 days, so you can stay in a DC hotel.

They will add your days together and claim you were in MD for more than 183 days if you travel at different times. The days don’t have to be exactly the same, but in an extreme example he can’t be in MD from Jan to April and then he leaves and you go May- August, and you say you didn’t violate 183 days.

[Anonymous]

I feel like there are a lot of tools to avoid estate taxes besides moving, no? Like if you’re willing to move, aren’t you willing to set up some trusts?

[Anonymous]

Anonymous wrote:We've lived in DC for almost 30 years. Youngest DC to graduate from high school in two years. We own a vacation home in another state with much lower tax rates.

Considering changing residency, but not selling DC SFH. As I understand it, as long as we spend 6 months in vacation home state, we can claim residency there. This will obviously be more doable as empty nesters.

Has anyone here done this? Just wondering how complicated the process really is.

People everywhere have done this for decades. Domicile for >180 days in a tax haven island or state and do other 179 days wherever.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We've lived in DC for almost 30 years. Youngest DC to graduate from high school in two years. We own a vacation home in another state with much lower tax rates.

Considering changing residency, but not selling DC SFH. As I understand it, as long as we spend 6 months in vacation home state, we can claim residency there. This will obviously be more doable as empty nesters.

Has anyone here done this? Just wondering how complicated the process really is.

People everywhere have done this for decades. Domicile for >180 days in a tax haven island or state and do other 179 days wherever.

Yep. This is big with people in NYC who have a condo in Florida and live there 180 days to a T every year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plenty of people do this. Keep track of credit card statements in case you have to prove that you were actually there for 6 months.

Because OP is planning to keep their place here, no doubt will be here quite a bit, will continue to rely on our services, but wants to avoid paying taxes. Then they'll complain about how things are here, without putting their money where their mouth is. Not to mention they're likely to cheat and be here more than six months a year.

When doing your math, OP, don't forget you lose the homestead exemption on your house, the opportunity for a 50 percent reduction in your property taxes through the senior citizen discount, the right to register your car here and get zoned parking, etc. etc. etc. Plus it's just a shitty thing to do to the city and it makes you a cheapo. If you have to change your residency to avoid city taxes you're not comfortable enough to retire.

Yes, we have a second home in a much more friendly tax state. No, we don't consider this.

Well, you’re a fool.

Maybe. But I'm sure as hell not gonna start counting my days to save taxes.

OP isn't saying "we're finally empty nesters and can move to where we want and away from DC." Nope. She's saying that as empty nester she thinks it's "doable" to be here less than six months. So yeah it's all about structuring your very whereabouts around state incomes taxes. Pretty sad.

Not really. Assuming you like it in DC and like the other location, I think it could be a lot of fun and very freeing!

Except that's not what OP is saying. What about "we think it's doable" do you not understand? And what's "freeing" about counting your days?

NP. I'm with you. If you're well-to-do who wants the hassle.

[Anonymous]

Anonymous wrote:We're following OP's plan. But I have questions.

We want to try this new model of "transitional retirement." So for two years after our move, we'd continue to work. Just from a lovely beach town in North Carolina.

My husband's company has North Carolina operations, and would let him work from our home there. He'd come back and forth to our Bethesda home as needed but be careful not to be back here more than 183 days. Is it safe to assume that if he find some urgent need to spend a few more days than that, he can stay in a DC hotel rather than our Bethesda house, and Maryland can't say anything about it?

As for me, I'll probably get a part-time job or maybe a remote one. But I think my current employer might ask me to stay on as a part-time consultant. If I agree to that, I'll still need to be back in Maryland a fair amount.

Do I need to make sure that my days in Maryland are the exact same as my husbands? Do we both just track and make sure that together we're not totaling up a combined 183 days?

All this is a little complicated. But we're really excited about getting out of the DC area full time for a few years. And then coming back when our kids start having kids.

We're planning to do this too. The spouse who is the big earner will be living out of MD for 183+ days/year. They can even come see the other spouse/kids for impromptu get togethers without entering MD, like meeting for dinner in Tysons or DC instead of in MD.

[Anonymous]

Anonymous wrote:Why would you do that?

You voted in these high taxes and social policies.

Stay and pay your fair share for the things you voted in.

Don't go to another state with better policies to avoid paying for the policies you voted in for everyone else.

Does your logic apply at the national level also? If so, a lot more people would have left the US by now!

[Anonymous]

Anonymous wrote:

Anonymous wrote:My retired relatives do this. They have a really nice Airstream trailer and spend at least 6 months of the year at an RV park in Florida.

You need to register your vehicles there, change your driver's license, and voting registration to help establish tax residency. One thing to watch for is that in low income tax states, the government finds other ways to raise revenue, like through property tax, personal property tax, or sales tax. For example Tennessee has no state income tax but sales tax is 7-9% depending on what city you're in. Texas has no state income tax but property tax is about 2% (around the DMV it's around 1%).

Whenever someone gives the sales tax makes up for it argument I know they are a low earner and haven’t paid high taxes.

Many of us are paying tens of thousands or even hundreds of thousands a year in state income taxes. No, an extra 3% in sales tax on consumer goods and restaurant meals will NOT make up for the $80k I paid last year to my state.

Now if you’re a low earner and don’t pay much in income tax then I can see that you might be concerned with sales tax.

The sales tax does come into play in these cases for big-ticket purchases, like buying a new car. You'll be registering it in the low income tax state, but be paying sales/excise tax on it. But I agree, if you have high income, the bigger impact is the lower income taxes.

A friend of mine collects Patek Philippe watches that typically cost $50k+ per watch. He has his jeweler in DC ship it to the UPS store in Delaware and he drives to pick it up there to avoid sales tax. That 2-hour drive saves him thousands. He times it with the family trips to the beach.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My retired relatives do this. They have a really nice Airstream trailer and spend at least 6 months of the year at an RV park in Florida.

You need to register your vehicles there, change your driver's license, and voting registration to help establish tax residency. One thing to watch for is that in low income tax states, the government finds other ways to raise revenue, like through property tax, personal property tax, or sales tax. For example Tennessee has no state income tax but sales tax is 7-9% depending on what city you're in. Texas has no state income tax but property tax is about 2% (around the DMV it's around 1%).

Whenever someone gives the sales tax makes up for it argument I know they are a low earner and haven’t paid high taxes.

Many of us are paying tens of thousands or even hundreds of thousands a year in state income taxes. No, an extra 3% in sales tax on consumer goods and restaurant meals will NOT make up for the $80k I paid last year to my state.

Now if you’re a low earner and don’t pay much in income tax then I can see that you might be concerned with sales tax.

The sales tax does come into play in these cases for big-ticket purchases, like buying a new car. You'll be registering it in the low income tax state, but be paying sales/excise tax on it. But I agree, if you have high income, the bigger impact is the lower income taxes.

A friend of mine collects Patek Philippe watches that typically cost $50k+ per watch. He has his jeweler in DC ship it to the UPS store in Delaware and he drives to pick it up there to avoid sales tax. That 2-hour drive saves him thousands. He times it with the family trips to the beach.

That's fraud. Our accountant asks every year if we bought stuff we didn't pay sales tax on.

OP, that's a lot of hassle since you're not making that much. But yes, better to die while you're not in DC.