If you’ve recently relocated to Florida, you’re not alone. And like many others, you’re likely aware of the many tax benefits of doing so. According to the state’s Office of Economic and Demographic Research, between April 2020 and April 2021, an estimated 329,717 new residents settled in Florida. Recent estimates are that roughly 900 people a day are moving to Florida, many fleeing the higher taxed states of the Northeast.
Many states across the country are currently operating at a deficit and the loss of taxpayers is driving an increase in state residency audits. By and large, the rules haven’t changed but states are getting more aggressive and fewer exceptions may be made than in the past.
If you want the benefit of Florida’s tax rules while still owning a property in another state, it’s important to take the following actions to prove your intent to be domiciled in Florida:
1. Spend time in Florida – If you spend more than half your time in Florida, you won’t have to worry about the 183-day threshold in the state you go back to (a rule many states go by) If you can’t spend that much time in Florida, then take a vacation, visit family or friends, or spend time in some other location—anything to avoid spending 183 days or more in your high-tax state.
2. Obtain a Florida driver’s license – Getting a Florida driver’s license is a must if you really want to be a Florida resident. In fact, this is something you should do right away, since you’ll need the license to vote, apply for property tax breaks, and do other things in Florida that will help you establish residency in the state. New residents must apply for a Florida driver’s license in person at any local office offering driver’s licenses services.
3. Register an automobile in Florida – When you’re getting your driver’s license, make sure you register your car or truck in Florida, too. If you own an RV or boat, register it in Florida as well. This is further evidence that you consider Florida your permanent home. You’ll have to pay a registration fee. The amount is based on the type and/or weight of the vehicle. And don’t forget to call your auto insurance carrier and have your vehicles covered in the Sunshine State.
4. Own a home in Florida – It doesn’t really look like you intend to make Florida your permanent residence if you own a giant house up north but only rent a tiny apartment in Florida. That’s why New York, for example, considers the size of each home a snowbird owns or rents to be an important factor in determining residency. So, if possible, get a Florida home that’s at least roughly the same size as your northern home—although it’s better if your home in Florida is larger.
5. File a Declaration of Domicile – There isn’t a standard, state-wide form that you can use. Each county has its own version of the form. Also, you’ll never convince a tax auditor from up north that you’re a Florida resident if you don’t present yourself as a Florida resident. So, if you meet someone new, tell them you’re from Florida. If you’re filling out a form that asks for your address, use your Florida address. And update your social media page so that your Florida town is listed as your current home.
6. Send your children to Florida schools – If you have minor children, enroll them in a Florida school. Why? Because the quality of the local schools is usually an important factor for parents deciding where to live. This is true whether the schools are public or private. So, for example, if your children attend a boarding school up north and rarely visit your Florida residence, this could be perceived as evidence you don’t consider Florida to be your primary and permanent home.
7. Apply for the Florida homestead exemption – In addition to paying taxes in Florida, take advantage of the state’s tax breaks for residents. For example, if you own a home in Florida, apply for the state’s homestead property tax exemption. Not only could your home’s taxable value be reduced by as much as $50,000, but it’s further evidence of your status as a Florida resident. If a similar tax break is available in your northern state, don’t claim it if it’s only available to residents.
8. Register to vote in Florida – Where you’re registered to vote says a lot about the place you see as your permanent home. So, to help your argument of being a Florida resident, make sure you register to vote—and actually vote—in Florida.
9. Work in Florida – If you work at home or in multiple locations, make sure your employer lists your Florida address as your home of record. Paychecks and W-2 forms should be sent to Florida, and all your benefits should be based in the state. If you’re an independent contractor, all invoices and other correspondence should include your Florida address. Payments and 1099 forms should be sent to Florida, too. If you’re a doctor, lawyer or other professional, get licensed to practice in Florida.
10. Transact business in Florida – If you own a business in your summer state, moving it to Florida will certainly help your case if your status as a Florida resident is challenged. If moving your northern business to Florida isn’t possible, running it from Florida might be an option. However, business owners in Florida who are deeply immersed in their company’s operations up north can have a hard time establishing residency in Florida. The degree of your involvement in the business’ day-to-day operations will be looked at closely. You don’t necessarily have to sell the business or completely relinquish your management role, but taking more of a “hands-off” approach will support your claim for Florida residency.
11. Establish social memberships in Florida – To show that your life is now centered in Florida, join clubs, take up hobbies, volunteer and meet new people in the state. Tax auditors are going to question your Florida-resident credentials if you constantly head north to socialize. You can keep your northern friends, but make new ones in Florida, too.
12. Draw up estate planning documents showing Florida residency – There are at least two good reasons why you should consider updating your will and other estate planning documents. First, listing your Florida address as your primary residence, including Florida property, and indicating that your estate will be administered under Florida law will help you establish Florida residency. Second, Florida doesn’t impose a state-level estate or inheritance tax. So if you’re declared a resident of Florida, estate and inheritance taxes from other states can be avoided.
13. Pay Florida taxes (such as real estate taxes) – Sure, there’s no state income tax in Florida, but that doesn’t mean Florida residents don’t pay other taxes. For example, you still have to pay federal income taxes as a Florida resident. So, when filing your next federal 1040, make sure you list your Florida address as your home address. You should also change your address on file with the IRS by submitting Form 8822. As for Florida taxes, make sure you pay your local real estate taxes on time and in full. If you own a business, are self-employed, or rent out property in Florida, you may also owe personal property taxes. If you’re not paying these taxes as required, or any other Florida taxes levied on residents, your standing as a true Florida resident may be diminished in the eyes of the law.
We hope this has been an informative guide or check-list on how to make sure you are properly domiciled in Florida. We want you to enjoy the tax benefits that likely played a considerable part of your decision to relocate.
If you have additional questions, have interest in working with us, or would like to schedule time with a Cordasco Financial Network advisor, please email us at [email protected]
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