What to Consider Before You Pack Up and Go | Global News Avenue

Moving to a state with lower taxes seems like a good way to save money, especially on income taxes. However, the overall tax situation may be more complex than you think. Although you can spend less money state income taxyou may face higher costs in other areas.

Here’s what you need to consider before packing your bags and moving to another state.

When you move to another state, you change your residence

When you move to a new state, you don’t just change your address; you are changing your residencewhich is your legal permanent residence. Domicile determines in which state you pay taxes, and it can also affect eligibility for other legal benefits, such as disability or disability unemployment benefits.

Katie Carlson, head of wealth strategy at Bank of America Private Bank, said, “While you can have multiple residences at the same time, you can only have one residence.” She said, “There is no single factor that determines whether a person is Possession changes residence.”

Steps to take before changing residence in NSW

If you plan to establish a new residence in a different state, there are some key steps to follow. Carlson recommends the following:

• own or rent a house In NSW and living there. Stay in the new state as much as possible and stay away from the old state for 183 days.
• Develop relationships in NSW, including with health care providers, faith-based organizations and charity organization.
• Get a driver’s license in NSW, register to vote in NSW, renew your car registration and update your information estate planning To reflect your new residence – make sure it complies with the laws of your new state and submit a declaration of residence or similar form.

Look beyond state income taxes when moving

Consider more than just getting best mortgage rates and found a lower state income tax When moving to a new state.

“State income taxes are often the key driver of a change of residence. Understanding taxes is important, but you can’t let the tax tail wag the dog. You need to make sure that being away from family and friends, embracing a new lifestyle and saving on taxes is worth it,” Carlson said .

States with no or lower state income taxes can make up for lost revenue in other ways tax.

“States with lower taxes typically try to make up for the lack of state income taxes in a variety of ways. Real estate taxes, sales taxpersonal property taxes (car, boat, etc.) and generally higher levels of licensing and other official fees are also generally higher. ” Miller Investment Management In Manassas, Virginia.

“One tip, even if you may not be considering buying a new home, real estate agents will often keep a comprehensive list of location factors, which often include various forms of taxes. Just ask them for a relocation kit and mention tax issues. ”

bottom line

Moving to a state with no or low state income tax may save you money on your state tax bill. But there is more to consider, such as paying more for other taxes, e.g. sales tax and personal property taxes. So weigh the pros and cons carefully.

To change your state of residence and taxation, you need to rent or own a home in the new state and reside in the old state for 183 days. You will also need to obtain a driver’s license, register to vote and update your car registration in your new state.