It was hard enough to deal with a change in residency when people were retiring,” says Joe Roberts, CPA and head of wealth advisory services at Rockefeller Capital Management. In other words, you have to pick a specific state to establish statutory residence, regardless of how many different states you stay in over the course of the year. People might be turning into social media stars thanks to photogenic feeds that depict an itinerant lifestyle, but tax collectors have no use for “Not All Who Wander Are Lost” bumper stickers. Establish a primary residence for income tax purposes High income tax states like California and New York make it very, very difficult” to escape a tax bill, Conzo cautions. “Budgetary constraints added much more scrutiny on nonresidents or people who claim to be nonresidents. Tax revenues initially plunged, prompting states to get more aggressive about claiming income tax. “From a sales tax perspective, it became a very big ruling, states jumped on the bandwagon and said, from an income tax perspective, we should look into this.”Įnter COVID-19. “Suddenly your physical nexus was as important as your economic nexus,” says Robert Conzo, CEO at investment advisory firm The Wealth Alliance. ![]() ![]() The tug-of-war states are waging for your tax dollars was exacerbated by the pandemic, but the foundation was laid in 2018 with a pivotal Supreme Court ruling CPAs refer to as the “Wayfair ruling.” That decision said states can require ecommerce businesses that sell goods to residents to collect sales tax on those purchases - even if the business doesn’t have a brick-and-mortar location in the state. Hawaii Alaska Florida South Carolina Georgia Alabama North Carolina Tennessee RI Rhode Island CT Connecticut MA Massachusetts Maine NH New Hampshire VT Vermont New York NJ New Jersey DE Delaware MD Maryland West Virginia Ohio Michigan Arizona Nevada Utah Colorado New Mexico South Dakota Iowa Indiana Illinois Minnesota Wisconsin Missouri Louisiana Virginia DC Washington DC Idaho California North Dakota Washington Oregon Montana Wyoming Nebraska Kansas Oklahoma Pennsylvania Kentucky Mississippi Arkansas Texas File Your Taxes How we got here (spoiler: online shopping) Accountants and tax pros say that careful planning can help mitigate unexpected state income tax obligations. Meanwhile, some people are taking the digital nomad approach and eschewing a home base altogether.įor people who are still in the workforce while residing in two (or more) states, there are some important tax implications. Pre-retirees can also benefit from this trend, if the new flexibility allows them to test out possible retirement destinations ahead of schedule. ![]() Real estate agents report an increasing number of young professionals flocking to onetime retiree havens like Florida to escape Northern winters. While the “snowbird” lifestyle has typically been thought of as the purview of older adults, the shift to working from home for many knowledge workers means that they can live in whatever place - or places - they choose. ![]() This has created an unexpected migration - which portends looming tax headaches for people who don’t plan out a strategy in advance. With return-to-office plans getting pushed back repeatedly, it’s likely that remote work will be common, if not ubiquitous, for the foreseeable future.
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