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Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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yes, per link...
"In another example, one spouse has retired and moved out of the couple’s original home to reside in a state with a more favorable climate "
That's me... I check the weather... and go there. today we're (couple) 2500 miles apart each having a great time. 'Honeymoon meetup' next week. as often.
as always...
Know the rules, follow the rules. (SD requires ONE NIGHT per lifetime if you meet their Nomad domicile requirements).
States with income tax have quite restrictive policies, but nearly all are avoidable / mitigated. CA is probably the worst, but still easily complied if you have the need or incentive to do so.
I have no clue (or interest) about the states east of Missouri River, but planning extended retirement stays internationally and retaining different domiciles. It was my 30+ yr worklife to live in various locations throughout the yr, and retain the tax benefits of a non-taxed state / country domicile. IRS / nation always get's their share. I'm more interested in saving time and trouble, than taxes. All my LLC's are also in non-income taxed states. For that reason. No annual tax prep for states.
Alabama doesn't tax SS . . . or pensions. And they just passed a bill not to tax the first $6000 from a 401k/IRA or any other type of retirement account.
Having not quite yet retired I did not realize until last night that Oregon does not tax Social Security. Maybe another good reason to max it out.
There is an initiative on the ballot for 2024 to Freeze Property Taxes on people 65 and older.
I live just minutes from Washington State that does not tax income, but, does have a sales tax. Washington tends to have a higher cost of living than Oregon. It may not be worth making that move; but, if you are downsizing it may be worth considering. Maybe when RMD's kick in (for me at 75) when I am also ready to downsize.
Is there a question in there or are you just describing your thoughts on the issue?
"In another example, one spouse has retired and moved out of the couple’s original home to reside in a state with a more favorable climate "
That's me... I check the weather... and go there. today we're (couple) 2500 miles apart each having a great time. 'Honeymoon meetup' next week. as often.
as always...
Know the rules, follow the rules. (SD requires ONE NIGHT per lifetime if you meet their Nomad domicile requirements).
States with income tax have quite restrictive policies, but nearly all are avoidable / mitigated. CA is probably the worst, but still easily complied if you have the need or incentive to do so.
I have no clue (or interest) about the states east of Missouri River, but planning extended retirement stays internationally and retaining different domiciles. It was my 30+ yr worklife to live in various locations throughout the yr, and retain the tax benefits of a non-taxed state / country domicile. IRS / nation always get's their share. I'm more interested in saving time and trouble, than taxes. All my LLC's are also in non-income taxed states. For that reason. No annual tax prep for states.
But in order to benefit from the domicile in a non-tax state (or in any particular state) when you have multiple residences, you have to spend at least 183 days per year in the state in which you are domiciled. How do you comply with that requirement if you travel >50% of time (as you stated)?
I used to work all over the place, but my work contracts were temporary, so it was easy to argue that MA was my tax domicile even though I stayed in MA for much less that 183 days in certain years. But now that I am retired, I make sure that I spend at least 183 days per year in my primary home (which I document with phone records) - which is not a major problem since I like to return to a familiar place equally as much as I like to have a frequent change of scenery (which is why I prefer to have the second home rather than travel to different places constantly - it would be too annoying and exhausting to constantly make new travel arrangements).
Alabama doesn't tax SS . . . or pensions. And they just passed a bill not to tax the first $6000 from a 401k/IRA or any other type of retirement account.
The feds make up for it!
Alabama also lets you deduct your federal income tax amount from your Alabama state taxable income. It is one of just a few states that allows this.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,747 posts, read 58,102,528 times
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You don't need to reside 183 days in your domicile state (depending on the state)
But... you must NOT trigger domicile in another state!!! (State dependent as per rules)
I can assure you I've never spent 183 days / yr in my domicile state.(during the last 40 yrs). It rains 280 days / yr there, and I melt if I get rained on. I have better places to be!
If income tax free SD ever offers an Enhanced CDL, with port security and immigration authority... I'll change my domicile there. (Only one overnight stay / lifetime required). At the moment , I'll keep paying my $50/yr privilege to my current income tax free domicile. I had to be careful while working a lot in CA to not trigger domicile there. It's easy enough to avoid. Leave often, don't own property, or register utilities...
Tax authorities can nab your cc transactions if they want to prove your domicile. So... just be smart, and legal about it. Nothing deceitful, just living within the established rules (petty as they may be).
You don't need to reside 183 days in your domicile state (depending on the state)
But... you must NOT trigger domicile in another state!!! (State dependent as per rules)
I can assure you I've never spent 183 days / yr in my domicile state.(during the last 40 yrs). It rains 280 days / yr there, and I melt if I get rained on. I have better places to be!
If income tax free SD ever offers an Enhanced CDL, with port security and immigration authority... I'll change my domicile there. (Only one overnight stay / lifetime required). At the moment , I'll keep paying my $50/yr privilege to my current income tax free domicile. I had to be careful while working a lot in CA to not trigger domicile there. It's easy enough to avoid. Leave often, don't own property, or register utilities...
Tax authorities can nab your cc transactions if they want to prove your domicile. So... just be smart, and legal about it. Nothing deceitful, just living within the established rules (petty as they may be).
Well, for a retiree (who no longer works anywhere), and does NOT own a home in CA but somewhere else, proving a single income tax home (equal to domicile) is a non-issue no matter how much the person visits CA. For a retiree, the issue of domicile arises only if he/she/they have two or more homes, located in different states. That opens a solid possibility of arguing for dual taxation, if the person does not spend 183 days at the primary home/domicile.
My problem is not proving that I don't have a domicile in CA. I am solidly domiciled in Boston, where I have a huge personal history, and where I like spending more than 6 months per year. I do not spend more than 4 months per year in CA, I don't keep much stuff in CA, don't have a bank account or driver's license or voter registration in CA, and don't have any mail delivered in CA - I just put my Boston mail on mailhold when I go to CA (among other reasons, because mail gets regularly stolen in San Francisco nowadays).
My problem in CA is that the street crime has gotten unbelievable, and the property tax on my second home in CA might go up to 5% of the value of my condo per year. If that additional taxation really does happen and/or if the city remains this unsafe, I'll sell the place in CA, regardless of all the memories and all the ongoing fun of crossing the country back and forth. Such is life...
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,747 posts, read 58,102,528 times
Reputation: 46237
Quote:
Originally Posted by elnrgby
...
My problem in CA is that the street crime has gotten unbelievable, and the property tax on my second home in CA might go up to 5% of the value of my condo per year. If that additional taxation really does happen and/or if the city remains this unsafe, I'll sell the place in CA, regardless of all the memories and all the ongoing fun of crossing the country back and forth. Such is life...
OK, I fully understand, so you plan to keep a MA domicile. and you plan to sell your CA property due to the culture / personal safety issues that were unexpected, but are not getting resolved.
so... as mentioned... IF your concern is to reduce your massive capital gains hit on selling your CA property... you figure out how to mitigte that.
one solution for that I have used in 'Installment sale', and I incrementally stretch out my gains over many yrs, not significantly affecting my income taxes or my IRMAA. But... there are downsides to doing that (You don't have that huge capital asset to burn up and pay 30+ % tax on!).
It is but one of many solutions.
You determine which solution best meets your objectives. (and have a plan B and C).
I'm sure my 'financial guru' son would have a very simple solution. And I bet it would be...;
"Hey, you're done with that place, what's its best use value to your future plans?" He would then say... "Hire a property management company, and take your checks and FORGET about it. Your heirs (or charities) will get a 'step-up-basis' and can chose to keep it, or sell it, or exchange it. If you want some equity out of it... put a mortgage on it that will still cash flow positive. Mortgages are deductible, so a real benefit to keep your income low "
Such is the way with kids... definitely don't pull the same bonehead decisions as their parents, just set the objectives and execute.
I too am having to leave areas in the USA have have enjoyed for 50+ yrs. They've irreversibly changed, and so have I.
I have a few properties tied up in self directed IRA held LLC's, which will take some complicated manipulations. But I have just resolved those today (no tax hit, no direct / individual RMD required).
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Maybe another good reason to max it out.
