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Domicile and Taxation Isssues

Of the many advantages of moving to Florida for alternative asset professionals, tax savings are right at the top of the list. In order to take advantage of those taxation benefits you're going to have to show that you're both a resident of Florida and domiciled within the state. These two thing are extremely important and particularly relevant to clients who own homes in multiple locations.

The taxing authority from the "high tax" location you're moving from does not want to give up that tax revenue you've been giving them. In most cases they're going to continue to tax you and then make you prove to them that you really don't live there anymore. 

Proving your domicile

In the case of domicile there are two issues:

(1) Which state does the taxpayer intend to be his domicile

(2) Which state does the taxpayer have the greatest connections

Understanding the items below can often make the difference in forcing the "high tax" location revenue officials to recognize your new domicile. The following examples tend to show which state has the greatest connection to you, the taxpayer. 

1. The state in which you are registered to vote. Good indicator of full time residency.

2. Drivers license and vehicle registration. Possibly the first document the tax authorities will look at.

3. In Florida, a homeowner can apply for a homestead exemption. Once the state has made it own independent finding that your new home is in fact eligible as a permenant residence, they have virtually nullified any potential argument from another authority.

4. Where you hold family and social events

5. Where your children go to school.

6. The state where you have doctors, accountants, lawyers, and other professionals. 

7. The state where you worship regularly (synagogue, church, etc.)

8. The state where you have pets.

9. Participating in social organizations and athletic teams.

10. The state where you keep artwork, personal items, etc.

11. The state used to record addresses for passports, insurances, mortgages, tax returns, etc.

12. The state where you receive mail.

13. The state where you declare residency for licenses (fishing, hunting, etc.) Revenue officers know to specifically check these license applications as well as other in state tuition programs. Checking the wrong boxes on these forms can be a difficult trap to get out of. 

Make sure your Advisors and CPA'S are familiar with issues arising from clients moving from high tax areas to low tax areas. K-FIN Group can help by introducing you to its network of experienced professionals if needed. These are people who are extremely familiar with these issues and other issues related to domicile and tax issues.

Residency requirements

Florida requires that you live in the state for 6 months and 1 day in order to meet the residency requirements. Make sure you keep records of time spent in each locality to avoid problems with residency requirements.

*Some of the above information is summarized from research provided by Surgent McCoy CPE.

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