General

Florida Asset Protection – No State Income Tax in Florida

Most people are aware that Florida does not impose state income tax on its residents.  However, many part-time residents do not understand how to use this Florida law to their advantage.  As an example, an individual who spends part of the year in Florida and part of the year in New York, is liable for state income taxes in New York if they are considered domiciled or a resident in New York.  To avoid state income tax in New York, an individual should ensure they are not considered a resident of New York.  States that impose income tax typically have laws that define a “resident” for state income tax purposes.  In New York, if an individual spends more than 183 days in the state, they are considered a New York resident for income tax purposes.  If you maintain a residence in another state, and you want to be considered a Florida resident for income tax purposes, you must be careful regarding how much time you spend in the other state.

Next, to take advantage of Florida’s lack of income tax, an individual will need to establish domicile in Florida.  Establishing domicile is not difficult, but certain steps must be taken.  It is important to show that an individual intends to make Florida their permanent place of residence.  Factors that show this intent are: maintaining a residence in Florida, employment or business ownership in Florida, holding a valid Florida driver’s license or identification, registering vehicles in Florida, bank statements with a Florida address, registering to vote in Florida, and using your Florida address when filing federal tax returns.  Establishing domicile in Florida can be a major financial tax advantage.  However, Florida domiciled individuals must also be aware that they may still be liable for income tax in other states where they own property or businesses.  Be sure that you have properly established domicile in Florida, and understand the tax implications of your personal and business activities in other states.

If you are interested in how you can take advantage of Florida’s favorable income tax climate to your advantage contact The Law Office of Ryan S. Shipp, PLLC to help you with your legal needs needs.  Call us today @ (561) 699-0399 or set-up an appointment to come visit us at our Lantana, Florida office location.

Next week the series will discuss Florida’s Estate and Gift tax laws, especially in relation to individuals with property in other states.

 

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