Saying goodbye to state income taxes
 

Hi, I’m a federal retiree living in Virginia. I plan to sell my house; and sell or re-register all personal property in Florida; and buy and become a full-time Villages resident. My local CPA will file my part-year Va taxes, but Virginia had/has a reputation for seeking taxes from former residents on the theory that their retirement income was the result of living in the state while earning that retirement.
I’m interested in hearing your story of settling up with, and disengaging from, your home state tax collecting system whether Virginia or other, what you used as your transition-to-Florida date, and any advice to avoid pitfalls. Many thanks in advance.

It's more of a fear than reality.
Your CPA can tell you facts, ToTV poster probably won't.
Follow Florida residency requirements & enjoy.

Agree. The OP may receive a bunch of threatening letters as the state tries to extort money from a former resident, but in the end, to quote Shakespeare, "Life is a tale told by an idiot, full of sound and fury but signifying nothing"

We moved here from Va 18 months ago but as full time Floridians.

Used the moved out date.

Our CPA advised us to move all of our funds out of VA in the event they came after us but they never did.

I am also a Federal retiree from Virginia. First of all, there is a Federal law that prohibits states from taxing retirement income from out of state residents. I filed a part year Virginia income tax return using my Florida address, and labeled it as the "FINAL" return. However, the state did bill me for personal property tax for my car until I retitled the car in Florida. But, they never questioned my residency and never tried to collect any income taxes. So, make sure that you go to the DMV, get a new Florida title and registration, and notify Virginia that you no longer have a car registered in Virginia, or they will continue to bill you. I think I even had to send them a copy of my Florida car title. Good luck.

Definitely listen to your CPA.

Note too that in 2017, the Florida requirement to declare Florida for legal residency was that you had to live here full time for 6 months plus one day. You may want to verify if that requirement still exists or has changed. We moved here from Michigan in May, arrived on a Saturday, and on that Monday immediately went down and acquired our Florida driver licenses and registered our cars. We only had to pay state income taxes to Michigan for income through May of that year.

establish Florida residency. File final part year state return. Federal law prohibits the old state from taxing retirement income at that point.

4 U.S. Code SS 114 - Limitation on State income taxation of certain pension income | U.S. Code | US Law | LII / Legal Information Institute

Trump filed this but it is not controlling. https://www.clerk.org/pdf/DeclarationOfDomicile.pdf

4 U.S. Code § 114 - Limitation on State income taxation of certain pension income
U.S. Code
Notes
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(a) No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State (as determined under the laws of such State)….

Residency Income Tax Requirements | Determining Domiciles
No single factor is dispositive in determining domicile; rather the factors are examined by the Department collectively to determine if the intent to acquire or abandon Virginia domicile exists. It is noteworthy, however, that the fact that a person who has moved outside of Virginia yet returns to the state to live within six months constitutes prima facie evidence that no intent to abandon Virginia domicile existed.

I regularly wonder why people ask this sort of question here. My pseudo-name is DAVE.
Imagine arguing tax law and your defense but DAVE on talk of the villages said.

We are exNew Yorkers 6% state tax, 3% City tax. We did not pay them when we cashed savings bonds after living in Florida for a year or two. We do not owe them taxes on IRAs.
ETC.

However, learning from our experience. We are old school. Still use checks. We had our old water company come after us in Florida not once but twice. First time I did their job.
Typical their accounting error, they toss it on you to do their job, free of course.
We found the bill, as I demanded it said final bill. I found the cash check with memo on it
paying final bill # in full. I sent it to them registered return receipt, cost me ????? about $7.00. A couple of years later they the company was sold and they started again with a collection agency. My second reply was, I refuse to do your job, research attached copy of signed return receipt. If,you choose to bother me further YOU WILL REGRET IT.

The problem is bottom feeding collection agencies will buy old receivables for pennies on the dollar and hound people to death with collection activities.

Last year had one that would make robo calls daily offering us a great deal paying them 50% of what we "owe". They just kept leaving messages on voice mail and we had to keep deleting them so as not to fill up voice mail with their nonsense.

We relocated from VA and none of that was true about the taxes. You will be blown away by the difference in tge DMV when you retitled your vehicles and get your new registration. Instead of spending hours working with rude, illiterate people, the Florida Representatives actually smile, are pleasant and have you out the door in under an hour.

When DMV does work in VA. they are as mean as mean can be. But they are only open by appointment nowadays, so they don't work much.

Moving taxes
 

NJ hit me for several thousand " moving taxes". Free. At last .

We retired here from VA five years and had the same experience- no issues.

Might we assume from the user name he is a material target for the tax man? California chased a resident who moved with patent income for 20 years.

Just follow the code and regulations of the departing state and keep good records. Law and accounting firms have free articles on the subject.

Well if a villager post doesn't provide facts I guess there's no point in you even writing this because we can't believe you

I'm from Virginia Beach. Lived here since 2014. Virginia doesn't get any of my money. My CPA is in Virginia Beach

We moved in 2019 from Virginia. I filed 2019 year tax as Florida resident. No issues. I have never heard a word from Virginia, but I am a conservative. Maybe they are glad I am gone. Getting rid of my vote was worth more than my money I guess!

Thanks to all for your thoughtful replies and great advice. Can’t wait to join the fine group of people that you are.

You guess wrong.

Income occurs when you receive it, not when you earn it. Virginia is out of luck after you move. Who’s afraid of Virginia’s Tax wolf anyhow.

Correct. And, a Federal law passed in 1996 prohibits states from taxing the retirement income of residents who move out of the state. Prior to that law, California had an aggressive enforcement effort to tax IRA withdrawals made by former California residents under the theory that they received a state tax "deferral" when they made the IRA deposits.

So true!

We moved here last year from Minnesota, where some ill-advised and hurriedly-purchased software on the part of the Minnesota DMV had been bollixing up the works on driver's license renewals, vehicle tabs, license plates--you name it--for at least two years. I recall getting my Florida driver's license: the lady behind the window was pleasant, knowledgeable and efficient. The entire enrollment process took maybe 15 minutes, start to finish. Following the question-and-answer process, I asked her how long it would take before I actually received my license (remember the six to eight week wait that is normal in Minnesota).

She looked at me with a sort of puzzled expression and said "you'll have it in your hand before you leave here".

Amazing.

That is exactly correct. I filed FL tax return in 2019 and the residency requirement has always been 6 months and a day. It’s also required for homestead for property taxes. I do know of folks who claim homestead in 2 states though because there’s no reciprocity in checking tax status, drivers license records etc.

To clarify, you don't need to live in Florida for 6 months to stop paying income tax to your former state. You can stop paying tax to the other state as soon as you move to Florida, but you need to have the intention of becoming a Florida resident. Also, I don't know what Florida tax return you would have filed?

Be careful of the residency requirements and make sure that you stop state income tax deductions that are being automatically withdrawn from your income sources. I bought in TV in Oct 2006, continued working in Massachusetts through March 2007. Moved to TV in Apr 2007, registered cars in Florida, but didn't sell house in MA until Sep 2007.
My last paycheck had a deduction for MA state income tax (my error) and my lump sum retirement bonus also had a deduction for MA state income tax . Two errors on my part there. I should have deferred that payment as well as changed the auto deduction for MA Income tax.
Once that money is in the state's hands, it is hard to pry their fingers apart.

As I said, my error, but beware.

Tell VA to get lost!!!!!

Get new phone # and un-list it.

I moved from Virginia without any issues. Sold my house there and bought one here, registered my car, registered to vote, etc. I’ve read many posts about needing to be in FL six months and a day, but I have many friends that travel for work and pleasure. I’m sure they don’t have to justify to anyone being out of state or out of the country. In fact, one good friend is a contractor overseas. He is gone 9 months of the year. His residence is still Florida.

:bigbow:

Way to much trouble, they did go away after awhile.

Usually when you move from a state that has a state income tax, and sell your property that you owned in that state, the former state doesn't try to continue to tax you with their state income tax. If you become a snowbird and keep your property up north, then you have to be much more careful.

For example, in Minnesota, you have to be gone from Minnesota a minimum of six months plus one day. If you are in Minnesota for one minute, it counts as one day. I don't think it counts if you are at an airport in Minnesota where the starting point and destination is not Minnesota, and it shouldn't count in Minnesota if you fly over the Minnesota airspace. But it would count as being in Minnesota if you drive across Minnesota.

In addition to the six months plus one day rule, there are also 26 other residency consideration factors. These are things like your driver's license. The factors include things like, where your vehicle is registered, insured, and stored, and the information you tell your insurance company. Address where mail is received. Where bank accounts are located. Where you are registered to vote, but casting an illegal vote does not count against you! The state could also ask for your location records from your cellphone company.

New York has a department that's dedicated to going after people who left New York. New Jersey is also has a reputation for going after people who leave New Jersey. But California's proposed taxation rules are the most extreme. California's proposed taxation laws would probably be thrown out by the courts if it ever passed legislation. California wanted the right to force you to pay the California state income tax up to 20 years after you move out of California. At first, this tax would only impact multi millionaires. But if it ever passed, that income threshold would likely drop down, so that everyone who leaves California would have to pay the California state income tax, up to 20 years after leaving California.

Make sure that you take the necessary action to reduce the chance that your former state might attempt to force you to continue paying their state income tax, after you moved from their state. You can also file the declaration of domicile document in your Florida county, which is more paperwork to indicate that you are a resident of Florida. The declaration of domicile document fees are a little over $20.

You should also file for homestead in Florida. Homesteading your property will cap the future annual property tax increases, and it will reduce your property's taxable base.

welcome. enjoy our beautiful State and enviable tax policies. if you came from a Blue State, however, please leave Blue State voting habits behind so we don't become a State people want to leave

Moved from NJ but keep my house there for several years. This could have caused a problem but did not.
In Fl got drivers license. Fl takes your old licenses and notifies that state. You can sign up for voting when you get drivers license. After these two steps you should be ok assuming you have a home in Fl.
Since Fl does not have an income tax I would keep my current CPA for a couple of years. That way if a problem comes up he knows you and the state.
By the way my NJ bank was also active in Fl so I did not change banks. But I would try and break every link to your home state. File address changes with IRS and all vendors and PO etc. You should be ok so don't worry if you get letters. Just be sure to dispute.

dittos re: Ct., some sort of fine for leaving the state. it was a few grand, then a month later we got a snail-mail letter saying how Ct. 'missed' us & is not too late to change our minds :1rotfl:

We left Connecticut in November 2019 (the end of the year). We still owned our house up north, but it was for sale and vacant, though we kept it insured until the closing date in March 2020.

We had to file a CT income tax return and were responsible for taxes on all the income, both hubby's pension and my part-time job. Since we were officially living in Florida the entire year of 2020 (and after), we didn't have to pay any income tax in Connecticut on pensions for the 2020 tax year.

Oddly enough however, we are still paying Connecticut state sales tax on our cell phone bill. This is actually a good thing since Connecticut sales tax is lower than Florida sales tax by around 1/2 a percent.

6 months and a day was never a Florida requirement.

Retiree Account Taxation
 

I believe there may be some confusion regarding what is retirement income. I've not heard of states pursuing taxes on income from "retirement accounts". I do know of states pursuing taxes on "Deferred Compensation". Check with your former employers' HR Department for the classification under which the income was initially reported and under what classification it will be reported going forward.

Retiree Account Taxation
 

Has nothing whatsoever to do with blue state or red state. It is dependent on how your employer reported it initially and how they report it going forward.

In 1986 I moved from Great Falls, VA to another state. I had no income tax problem with VA but since I resided in Fairfax County I had to pay an additional tax yearly on my vehicle registration for which the county issued a windshield sticker. Although I never paid any attention the tax must have been applied in arrears as a few years later I received a bill from Fairfax County with penalties, interest and collection fees tacked on from a law firm and had to deal with that.

By the way, OP, were you by any chance a patent examiner at the USPTO in Crystal City or a government patent attorney? I was an examiner at the USPTO long, long ago.

When you contribute to an IRA or 401K, you don't pay either state or Federal income tax on the money deposited. So, if you retire and move to a state that has no income tax, like Florida, you escape the state income tax entirely. But, prior to 1996, several states had laws that required you to pay the state income tax when you withdrew the money from those accounts, because the tax was only deferred, not forgiven. California even sent collection agents to other states to collect the tax. But, in 1996, the Federal Government passed a law that prohibits states from taxing withdrawals from retirement accounts. So, now you can legally escape the state tax by leaving the state.