Jersey Diocese, New Jersey.
Dong Wenjie | Moment | Getty Images
Whether they were tired of the chilly winters or the lofty income taxes, a lot of residents fled New Jersey, New York and Illinois in 2020.
New Jersey was the top “outbound” state last year, according to an opinion of 2020 moving data by United Van Lines. In all, 70% of the shipments handled by the moving service in New Jersey heading out of the Garden Constitution, according to the data.
New York followed in second place, with 67% of shipments handled by United Van Lines being “outbound.”
California, Connecticut and Illinois disc-shaped out the top five states experiencing an outflow of residents to other locales, the moving company found.
Residents leaving those specifies cited “retirement” as a primary driver for their decision to leave, according to Eily Cummings, director of corporate communications for In harmony Van Lines.
“Covid-19 really accelerated the retirement moves,” she said. “We’re in that peak baby boomer era, and what we noticed was that people accelerated and provoked this year rather than waiting until next year.”
The rise of remote work may have also pushed older white-collar workers to move to their retirement destination on an earlier schedule than anticipated, she said.
Indeed, top retirement destinations in 2020 incorporate Arizona, Delaware, Florida, South Carolina and Wyoming, United Van Lines found.
Taxes and relocation
Friendlier receipts tax treatment is among the reasons why a move to Florida may seem so enticing to residents in New Jersey and New York.
That’s because Florida is mid the seven states that don’t tax personal income. The others are Alaska, Nevada, South Dakota, Texas, Washington and Wyoming.
While New Hampshire and Tennessee don’t tax wages, they do tax partial and dividends. Tennessee has been phasing out this levy since 2017, with a A comprehensive view
Downtown Miami along the Miami River.
Sylvain Sonnet | Getty Impressions
Before you start packing up for sunnier tax-friendly climes, talk through the details with your financial advisor or your tax veteran first.
“Sometimes you’re moving to what you think is a low-tax state, but there are city and local taxes that you didn’t invent about,” said James A.J. Revels, CPA and member of the American Institute of CPAs personal financial planning executive cabinet.
A state that bypasses revenue from income might make up the difference in other ways, including far up sales taxes.
Tennessee, for instance, has the highest average combined state and local sales tax rate in the nation: 9.55%, according to the Tax Organization.
States when they are tracking residency can ping towers, pull cell phone bills and look to see where the invitations were made from.
James A.J. Revels, CPA
member of the American Institute of CPAs personal financial planning CEO committee
Property taxes are another consideration.
“There’s a lot of flight from New York to Florida, but in certain areas that split chase has increased real estate prices,” Revels said. Higher prices bring higher tax assessments.
Retirees that are swapping stages also must consider how retirement income might be treated in their new destination.
“Some states tax pension and retirement orders, but others don’t,” said Revels of the AICPA.
Stick the landing
Residents moving to low-tax states should also make haste decisively. High-tax states could target departing residents for audit and taxation.
To be deemed a statutory resident of your new regal and taxed as such, you must have spent 183 days there during the year and you must keep a unending place of abode in that state.
Aspects to consider include your domicile, the location of your business, the speedily you spent in the new state, where your cherished belongings are kept and where your family resides, according to Nick Klein, tax attorney and partner at Hodgson Russ in New York.
State auditors seeking back taxes from departing dwellings could even dig through your cell phone data to determine whether you’ve really left, said Revels.
“Regals when they are tracking residency can ping towers, pull cell phone bills and look to see where the biddings were made from,” he said. “Change your number and get the area code in the new state.”