Florida is a haven for snowbirds not only for its warm winter weather and outdoor lifestyle but also as being one of the few states without a state income tax. If you live in a state with a high state/local tax burden and you are spending significant time in Florida every year, you may benefit from becoming an official Florida resident. However, you must satisfy residency requirements and take a number of steps in case your “summer” state challenges your status with a residency audit and tries to compel you to pay state tax on all of your income as a resident there.
The Six-Month Rule
The basic and most important aspect of establishing residency is spending the majority of your time here. Many states have what’s called the “183-day rule,” which means the state will tax you as a resident if you own a home there and spend at least 183 days during the year (about six months) in the state. The days don’t have to be consecutive, and even part of a day can count as a full day.
If you are not able to spend six months consecutively here in Florida, you could also take your vacations here or visit family/friends to reach your six months. You should keep a record for each day and save supporting records like receipts for meals and other purchases made in Florida.
Licenses and Registrations
You should get a Florida driver’s license, which will enable you to vote, apply for property tax breaks, and other important things in Florida that also help you establish residency. Make sure you register your car, RV and boat here, further evidence that you consider Florida your permanent home.
Home Size
Having a large home in your “summer” state but only a small apartment here could hurt your case for residency. For example, New York State considers the size of each home owned or rented as a key factor in establishing residency. In addition, that state’s tax auditors take value into account, since a modest residence in New York City may cost more than a larger house here.
Update Your Address
Auditors will look for any evidence that you don’t consider Florida your primary home, so update addresses on all of your correspondence, credit cards and bills, including utility bills for your “summer” location. You may be able to file a “Declaration of Domicile” with the clerk of the court in the Florida county where you live. In Pinellas County, you can do that at https://www.mypinellasclerk.org/.
Community Affiliations
The more you socialize in Florida and maintain ties to social organizations in the state, the easier it is to document your commitment. So attend local meetings of any national organizations you are involved with, like the Lions Club or VFW. Consider attending a local church, synagogue or other house of worship. You should see doctors, dentists, lawyers, accountants and other professionals here in Florida.
Financial Commitments
Tax auditors know that most people use a bank near their homes. So, you should move your money to a Florida bank or a national bank with a branch close to your Florida home. Of course, be sure bank statements are sent to your Florida address. If you are retired, your Social Security checks or retirement plan distributions should be mailed to Florida or deposited into a Florida bank.
Income Records
Whether your income comes from an employer (W2) or you are an independent contractor (1099), your paperwork must reflect your Florida address. If you’re a doctor, lawyer or other professional, you should get licensed to practice to Florida. If you own a business in your “summer state,” moving it to Florida will help your case if your status as a Florida resident is challenged.
Taxes
And of course, your federal tax return should list your Florida location as your home address. Keep your real state taxes and any other Florida taxes levied on residents paid, to avoid diminishing your ability to satisfy the Florida residency requirements.
If you have questions about this featured topic or other accounting and tax related topics, please do not hesitate to contact us at 727-327-1999 OR [email protected].
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
