by Kathy Sablone, JD, AEP®, Co-Chief Planning Officer
by Florida has warm weather and no state income or estate tax. It is not surprising that many people choose to relocate to Florida when they retire. You may be surprised to learn that merely spending more than six months in Florida is not enough to change your residency from Massachusetts for tax purposes.
Under Massachusetts law, a “resident” is someone who is a) domiciled in the Commonwealth or b) someone who maintains a permanent residence in the Commonwealth and spends more than 183 days of the taxable year in the Commonwealth. If you continue to maintain a home in Massachusetts, then the Department of Revenue will take a variety of factors into consideration to determine whether you have severed ties with the state.
Certain factors provide evidence that you are changing your residency to Florida, such as:
- Establishing a physical residence in Florida
- Spending at least 183 days each year in Florida
- Executing and filing a Declaration of Domicile in Florida
- Obtaining a Florida driver’s license
- Registering vehicles in Florida
- Registering to vote in Florida
- Updating estate planning documents in Florida with a Florida attorney
- Applying for Florida Homestead Exemption (must be done between Jan 1 and March 31)
- Making sure homeowners insurance policies refer to Florida as principal residence
- Changing billing address and address for tax returns to Florida
- Involvement in both communities (country clubs, social life, etc.), location of your primary care physicians, bank accounts, and safe deposit boxes
There can be risks to changing your residency as Massachusetts is always reluctant to lose any taxpayers. In order to minimize the risks, you must demonstrate that Florida is the center of your business and personal life. Your Boston Financial Management team can work with your outside advisors to review the steps that you should take.
Important: This alert does not contain any legal or tax advice. You should always consult with your attorney, accountant or other professional advisors before changing or implementing any tax, investment or estate planning strategy.
IRS Circular 230 Disclosure:
Pursuant to IRS Regulations, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Professional Designation Minimum Requirements Disclosure:
AEP® – Accredited Estate Planner®. Minimum requirements for the AEP® designation include active practice for a minimum of five years within the following disciplines: accounting; insurance and financial planning; law; philanthropy; and trust services with at least one-third of the individual’s time devoted to estate planning. Additionally, one or more of the following professional credentials: JD, CPA, CLU®, CFP®, CPWA®, CFA, CAP®, CSPG, CTFA, MSFS and MST is required, along with three professional references and current membership in an affiliated local estate planning council.