"Snowbird" Tax Issues

The return of warm weather also signals the northward migration of the “snowbirds,” New England residents who escape the cold and snow by spending several months in Florida or other states with milder winter weather. But a word of caution to our neighbors who make the seasonal commute along I-95: pay close attention to state tax planning or you may find yourself paying more than necessary. While federal tax planning remains at the top of the “to do” list for most people, those who maintain homes in more than one state face the added burden of managing “tax migration” issues. For example, many Northeast natives who own a winter home in Florida choose to set up permanent residence in the Sunshine State. Florida has no personal income tax, no estate or inheritance tax, and no tax on “intangible” goods, which includes investments. But if you also maintain your home in Massachusetts, then you can still be considered a full-year resident – and subject to all state taxes – if you spend 183 days in the Bay State during a calendar year. The days don’t have to be consecutive, so plan your visits carefully. Even if you are not a full-time resident, if you maintain a home in Massachusetts you may need to file a tax return as a part-time resident. Things get more tangled if your winter residence is in a state that does have personal income tax, including Georgia, South Carolina and North Carolina. As you can see, being a “snowbird” has many advantages, but can also complicate your tax situation. If you need more information on multi-state taxation, or assistance in developing your own state and local tax strategy, contact Gray, Gray & Gray’s Tax Department at (781) 407-0300.

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