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Old 01-01-2010, 06:51 PM
 
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Suppose you own two homes, each in different states... you live in one home most of the time whereas the other home is occupied only part of the time... suppose the one in which you occupy less has better tax advantage for retirees... what is to stop you from filing in that state income tax instead of the one where you live most of the time? It seems its better to have two homes as retirees? One where you live and one where you file your taxes...
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Old 01-01-2010, 07:03 PM
 
Location: Baltimore
1,802 posts, read 7,294,033 times
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Quote:
Originally Posted by evilnewbie View Post
Suppose you own two homes, each in different states... you live in one home most of the time whereas the other home is occupied only part of the time... suppose the one in which you occupy less has better tax advantage for retirees... what is to stop you from filing in that state income tax instead of the one where you live most of the time? It seems its better to have two homes as retirees? One where you live and one where you file your taxes...
State tax collectors look very closely at so-called snowbirds - people who have vacation homes in Florida, Texas, Nevada, and other states that do not have income taxes. They will investigate to see where you vote, the state that issued your driver's license, where your cars are registered, where your bank accounts and other ties are located, etc. In addition, the house you owned first would usually be considered to be your domicile. The courts have generally stated that you must first abandon your current domicile and then establish a new one, in order to change your state of residence.

And even if you do meet the requirements of living in the state with the lower income tax more than 180 days of the year, your income would likely be taxed (at least partially) in the other state as a non-resident.
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Old 01-01-2010, 07:55 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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check the domicile rules of each state,
state of domicile legal definition of state of domicile. state of domicile synonyms by the Free Online Law Dictionary.
Domicile (law) - Wikipedia, the free encyclopedia
""Each State of the United States is considered a separate sovereign within the U.S. federal system, and each therefore has its own laws on questions of marriage, inheritance, and liability for tort and contract actions. Persons who reside in the U.S. must have a state domicile for various purposes. For example, an individual can always be sued in their state of domicile. Furthermore, in order for parties to invoke the diversity jurisdiction of a United States Federal Court, the plaintiffs must have a different state of domicile from at least one of the defendants.[5]""

as well as IRS http://www.irs.gov/pub/irs-pdf/p555.pdf (community property)
Some states are very liberal in domicile requirements (SD, income tax free requires ONE night - most states consider 6+ months within any one state = domicile).

RV and Ex-pat web sites have lengthy discussions on this topic.

Do remember that income earned within a state is taxable by that state's authority (Income properties, pension / SS / investment checks, ...) RV'rs usually have a mail forwarding service originating from an income tax free state (of which there are plenty of good choices, AK being the best for benefits)

Very interesting, Please report back!!
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Old 01-01-2010, 08:53 PM
 
Location: Bay Area
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We have the very situation you have described. We retired from CA, (bay area), and have two homes. Our primary residence is in Sparks, NV, and our second / vacation home is in the Palm Springs / Palm Desert area of CA.

Before retiring we worked on this dilligently with our financial planner and CPA (both of which are in CA). In order to make the NV home our primary residence we had to do several things. We closed all our CA bank accounts and opened new ones in Nevada. We registered to vote in NV, we have NV drivers licenses, we registered all of our vehicles in NV, we chose a NV insurance agent and changed all our insurance policies to new ones through him. All of our credit cards have the NV billing address. And most importantly, we make sure we spend more than half the year in NV, and less than half the year in CA.

Being retired, we do not work so are not earning any income in either state. If we earned income, taxes would be due in whatever state we earned them in.
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Old 01-01-2010, 09:40 PM
 
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Originally Posted by MJRinCA View Post
We have the very situation you have described. We retired from CA, (bay area), and have two homes. Our primary residence is in Sparks, NV, and our second / vacation home is in the Palm Springs / Palm Desert area of CA.

Before retiring we worked on this dilligently with our financial planner and CPA (both of which are in CA). In order to make the NV home our primary residence we had to do several things. We closed all our CA bank accounts and opened new ones in Nevada. We registered to vote in NV, we have NV drivers licenses, we registered all of our vehicles in NV, we chose a NV insurance agent and changed all our insurance policies to new ones through him. All of our credit cards have the NV billing address. And most importantly, we make sure we spend more than half the year in NV, and less than half the year in CA.

Being retired, we do not work so are not earning any income in either state. If we earned income, taxes would be due in whatever state we earned them in.
I was thinking about that... but who is going to "check" if you actually lived in NV more than half a year? That is, can you live in CA without worrying about it? There is no stopping you from owning a NV license, have NV banks, NV voter registration, etc... the only problem may be in NV license plates in CA for extended time (but I have seen people with out of state license in other states without problem - such as college students)... albeit the car insurance company might not be happy about it... I wonder if anyone tried this without going back and forth...
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Old 01-02-2010, 01:01 AM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,546 posts, read 39,934,465 times
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Quote:
Originally Posted by evilnewbie View Post
...albeit the car insurance company might not be happy about it... I wonder if anyone tried this without going back and forth...
Thus why I think insurance Co. will be the first to INSIST that our cars have GPS transmitters and probably our bodies as well, with obamacare

No one is currently 'riding herd' on you, BUT in the event of a DOR or IRS audit they will get your CC and utility bills and banking info to determine where you were when. Our state Highway Patrol does that to validate if you have registered your car in the adjacent (sales tax-free) state. Thus 'Auto-pay' is your friend, have your bills sent to the domicile of choice, and have someone buying stuff for you frequently (With your c card or acct). Watch your paper trail
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Old 01-02-2010, 01:33 AM
 
Location: Bay Area
51 posts, read 178,381 times
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Quote:
Originally Posted by evilnewbie View Post
I was thinking about that... but who is going to "check" if you actually lived in NV more than half a year? That is, can you live in CA without worrying about it? There is no stopping you from owning a NV license, have NV banks, NV voter registration, etc... the only problem may be in NV license plates in CA for extended time (but I have seen people with out of state license in other states without problem - such as college students)... albeit the car insurance company might not be happy about it... I wonder if anyone tried this without going back and forth...
As far as I know, no one checks, however I suspect the CA Franchise Tax board has criteria for auditing just as the IRS does. I guess that would be the check, and in the event of any such audit, we will have the paper trail to show what's what. In terms of how many days / nights you spent in one state vs another, that's a bit tougher. We figure the best we could do there would be the continuous gasoline purchases (we use a Shell card for all those purchases), not to mention eating out receipts (also on a charge card) etc.

I suspect other states do random checks of tax returns vs property owners and/or former residents. Especially states that border income tax free states where it's likely to happen.
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Old 01-02-2010, 07:09 AM
 
8,191 posts, read 11,905,691 times
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Quote:
Originally Posted by janetvj View Post
And even if you do meet the requirements of living in the state with the lower income tax more than 180 days of the year, your income would likely be taxed (at least partially) in the other state as a non-resident.
That would only be true if you had earned income from that state. If you are living off of pensions, annuities, Social Security, savings, etc., that would not occur.
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Old 01-02-2010, 07:12 AM
 
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if you didnt work in that state the odds of getting caught are nil unless your just unlucky and got hit with a random compliance audit.

if your working i wouldnt try it, to many ways with cell phones ,ezee pass and charge cards to prove just where you really do spend most of your time if audited.
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Old 01-02-2010, 09:56 AM
 
Location: Baltimore
1,802 posts, read 7,294,033 times
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Quote:
Originally Posted by mathjak107 View Post
if you didnt work in that state the odds of getting caught are nil unless your just unlucky and got hit with a random compliance audit.

if your working i wouldnt try it, to many ways with cell phones ,ezee pass and charge cards to prove just where you really do spend most of your time if audited.
A lot of states are cracking down on compliance by using data warehousing software that allows them to analyze and extract information about taxpayers based on specific criteria. You'd be surprised at how much information is out there and available publicy. This technology allows the tax collectors to identify taxpayers who appear to be avoiding taxes by claiming residence in another state (among many other uses).
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