Retiring to another state-state taxes (spouse, relative, retirees, respect)

[olson442]

I'd suggest purchasing the book "America's Best Low Tax Retirement Towns". It looks at all taxes (state, local, sales, property, vehicle, etc.) across three income levels and three house price levels. For each state, there are between 3 and 6 towns listed with taxes for each explained. Quite informative with many surprises.

For my fiscal grouping, there is a spread of about $5000 in non-federal taxes between where I might go (SC and FL $4000 to $5000) and where I currently live (NY, $10,000). When this is added to this the higher cost of utilities (50% more) and other less obvious items; an informed decision can be made.

[jlawrence01]

Before I would retire to another state for tax purposes, I would pay a few dollars to sit down and discuss your life with CPA who specializes in taxes. Most CPAs are pretty much up with the state and local tax laws. And if you do not believe that local taxes can be a killer, you are deceiving yourself.

Also, realize that tax burdens can be substantially different depending on your income level and where your income is derived.

[texdav]

You really need to do a overall costof living check.You alos need to look at the stabilty of the area your moving to because things can change. looking at the sates and local governamnt now gives who a pretty good idea of what financial condition they are in. that is because many have very high leagcy cost i teh future that will drive need for funding meaning more taxes and fees in the future.Many places have no industrial tax base and in future years will be mandated for many cost because of EPA and other requirements that can make them highly costly then.

[BestintheWest]

Originally Posted by Jaybee

I'm starting to research just where to retire. Have several years before that occurs (6 or 7). We've already made the decision to leave California-for a number of reasons-but that's not the subject of this thread.

My wife and I are both public emplyees (local government) and, god-willing, will retire with Public Employees (PERS) pensions. My question is will the pensions will be taxed by the state of California? Or will we merely be taxed by the state where we'll be residing? Anyone got any experience with that? I do understand the advantage of states with no state income taxes.

Thanks for the advice.

try this also, a little dated but good comparisons

Moderator cut: link removed

[marmac]

Originally Posted by forest beekeeper

There are many facets to this.

Generally the state where you reside will be where you file your income taxes. Unless you maintain a business activity in Ca; then no matter where you travel to you would be filing a 'non-resident' tax form in Ca.

Cost-of-living is a good factor to look at for any retirement area.

When discussing state income taxes, keep in mind that most states who do charge income taxes. Also most states have some form of standard deductions and exemptions.

For example, I retired to a state that does have income taxes. However our AGI has been below the combined standard deductions and exemptions. So we pay no income taxes, even though we live in a state where they do charge income taxes.

Another thing to consider is property taxes and sales taxes. Again every state is different. One tax might be high while the next tax might be low.

There are websites that try to do side-by-side comparisions. However if you look closely at those comparisons they fall apart.

Each of us is different. I might buy a $2million beach house and complain of the taxes; while you might buy a small farm and have very low taxes.

Even websites that try to make a comparison based on the average income, make assumptions that rarely fit.

I retired to a state known for it's high cost-of-living, due mostly to it's high taxes. But my pension is below their income tax trip-wire, and our lifestyle avoids most of their other tax trip-wires. So we live here paying very low taxes.

It really is an individual formula which will be different for each person.

If you are thinking of a place, try to imagine yoruself living there. With your projected retirement income, what exactly would your taxes have been last year? Are there programs that reduce yoru taxes? What do they base their property taxes on? and what programs do they offer to reduce your property taxes?

For example: We like living in a forest. Maine has programs for forested land. Keep your land in forest and the taxes are remarkably low. So for us it is a good fit. We live in a forest with a river out our back door, boats in the water. Our taxes run about $1.05 per acre per year. So 100 acres of forest costs $105 each year.

Each situation is different.

--"100 acres of forest cost 105 each year"--

Since most people would desire a house to built in that forest ( few retirees would want to live in a forest with no house) , what would the taxes be after a house was built ?

Would the taxes on 100 acres of forest including a house still only be $105 per year? If so, that is really cheap.

If not , your post is misleading as most retirees would want a house to go along with that forest.
( unless their name is Smokey the bear. )

[Zarathu]

While you may not want to move to Wisconsin due to its placement in the list, at the same time, to move to a place where there are no taxes of any kind means moving to some place in the USA that is like the third world.

For example, I could have moved to rural western PA where I owned a lot of land and a cabin. The property taxes there are miniscule, and the cost of living is 16% down from where I live now. But there is also completely nothing for me to do except watch cable TV. And when I asked friends and family whether they would visit me in retirement, they grimaced and prevaricated.

Move to some place where you know you will love it, and where you are pretty sure you have options.

We are moving to a high property tax area, but really only about 800 bucks more than now. But we'll have way less expenses and we can take on boarders from the local college too if we want to supplement income.

In your remaining 20 years or so, its not all about money.

[Curmudgeon]

Originally Posted by Jaybee

I'm starting to research just where to retire. Have several years before that occurs (6 or 7). We've already made the decision to leave California-for a number of reasons-but that's not the subject of this thread.

My wife and I are both public emplyees (local government) and, god-willing, will retire with Public Employees (PERS) pensions. My question is will the pensions will be taxed by the state of California? Or will we merely be taxed by the state where we'll be residing? Anyone got any experience with that? I do understand the advantage of states with no state income taxes.

Thanks for the advice.

This may have already been answered and you have probably already found out that if you have a California-based pension and even if you were only a part-time resident during 2009, CA can and will still tax you on the entire year.

Ten or 11 years ago the U.S. Supreme Court ruled that California's source tax was unconstitutional but CA found a way to make an end-run around the ruling for part-year residents (what a surprise!).

We're state retirees, left CA in early September, bought a home and took residence in Missouri but as far as we can tell, CA taxed us for the full year on our CalPERS income. However, that's it. We will only have to pay MO income tax from here-on-out and it's negligable by comparison as only a fraction of our government retirement is taxable and the maximum rate is only 6%.

[Escort Rider]

Curmudgeon is correct about California, which is a retiree's tax nightmare. With one exception, retirees get no break at all. The exception is that Social Security benefits are not taxed. Otherwise, pension income is just income.

But like someone else said here, there are considerations about retirement that go beyond money. I stayed in Los Angeles because I love the life I have created for myself here, and because my friends are here. I never entertained the thought of leaving, and I consider the extra taxation a small price to pay.

Just thought of another tax which is pretty reasonable: my property tax on a two-bedroom, two-bath, two-car garage town house is just over $200 per month. That one varies from county to county, however.

[csb365]

A pension from a job you worked in California is indeed considered California Source income.
See [url]https://www.ftb.ca.gov/forms/1995/95_1005.pdf[/url]

Nonresidents of California Receiving a California Pension
A pension attributable to services performed in California is California source income. California taxes this pension whether you are a resident or a nonresident of California at the time you receive it.
Example 1 — You worked 20 years in California. You retired and moved permanently to Nevada. While living in Nevada, you begin receiving your pension attributable to the services you performed in California. The taxable amount of your pension for federal purposes is $20,000.
Determination: As a nonresident of California, you are taxed only on your California source income. Because your pension is
attributable to services you performed in California, your pension has a California source and is taxable by California. Enter
$20,000 as the taxable amount of the pension on Schedule CA (540NR), line 16b, column E, and attach it to your Form 540NR when you file it. Do not make an adjustment on Schedule CA (540 or 540NR) to exclude the pension from total income in column A.

This publication includes other examples given in publication that will make your heart sink if you worked for even a portion of the time with your pension/retirement employer in the State of California.

[Gandalara]

Originally Posted by csb365

A pension from a job you worked in California is indeed considered California Source income.
See https://www.ftb.ca.gov/forms/1995/95_1005.pdf

Nonresidents of California Receiving a California Pension
A pension attributable to services performed in California is California source income. California taxes this pension whether you are a resident or a nonresident of California at the time you receive it.

Wrong.

PRIOR to passage of Public Law 104-95, pensions earned while working in California were considered "California Source Income" and were taxable income for non-residents.

Effective January 1, 1995, the U.S. Congress eliminated the practice with passage of Public Law 104--95. The Act eliminated taxation of non-residents for pension and retirement income, including monthly pensions, deferred compensation plans, IRAs and annuities, or certain other qualified employer payment arrangements created upon retirement.