Daniel Bernard was quoted in a Wall Street Journal article in regard to people leaving states with high state and local taxes for states with low to no state and local tax states.
Daniel was quoted as saying, “‘New York is very aggressive with residency audits. They can collect about $200 million a year this way, so it can be quite lucrative for them,’” Mr. Bernard says. “‘Snowbirds can get into trouble because they might go to Florida for eight months but still be considered domiciled in New York.’”
Daniel, an associate in the Trusts and Estates Department, states that when a New York taxpayer changes their domicile to Florida and no longer pays New York State income tax, New York State may conduct a residency audit to determine if that taxpayer should indeed no longer be subject to New York State income tax. There are two arguments that New York State will make as to why the taxpayer should be subject to New York State tax. One, that the taxpayer is still domiciled in New York, meaning that New York is the state the taxpayer considers to be his or her permanent home; or two, that the taxpayer is a statutory resident of New York because the taxpayer maintains a home in New York and spends more than 183 days of the taxable year in New York. Residency audits can be fact intensive and the burden is on the taxpayer to show that they are no longer domiciled in New York and/or that they have spent less than 183 days in New York.
In order to demonstrate that a taxpayer has changed their domicile, the following list, provides a list of actions one can take to demonstrate that they are now domiciled in Florida:
- Move items that are “near and dear” to you to Florida; such as your wedding album, jewelry, family heirlooms, and anything else you would keep in your home rather than a vacation property.
- Downsize your New York residence and purchase or rent an equal or nicer Florida residence.
- Wind down any involvement in active New York businesses.
- File a Florida Declaration of Domicile in the office of the clerk of the circuit court for the Florida county in which you live.
- File an application for a homestead exemption for your Florida residence. The homestead exemption provides property tax benefits similar to New York’s Star Program and certain creditor protections on your residence. The key to the homestead exemption for domicile purposes is that it must be on your primary residence, not a vacation home.
- Exchange your New York driver license for a Florida driver license.
- Register to vote in Florida.
- Register your car, boat, RV and other vehicles in Florida.
- Change your banking to a Florida bank (or a bank with branches in New York and Florida).
- Join a Florida church, synagogue, or other place of worship.
- Join Florida clubs, make Florida friends and establish your life in Florida.
- Update your estate and succession planning documents to include Florida documents, such as a Declaration of Health Care Surrogate, Florida Declaration and Florida Durable Power of Attorney.
To avoid being taxed as a statutory residence of New York State under the 183 day rule, the best practice is to keep a contemporaneous calendar that simply states where you are each day, New York, Florida or elsewhere, and be cognizant of how much time you are spending in New York.
The full article can be found here: https://www.wsj.com/articles/the-new-tax-math-for-people-living-in-high-tax-states-11568137115