Mixed earnings, accompanied by creeping energy and mortgage rate increases, reflect an economy that appears uncertain. Will the Fed’s meeting in Jackson Hole next week provide clarity? Annex Wealth Management’s Dave Spano and Derek Felske discuss.
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SALT deductions continue to be limited to $10,000 per tax return in 2022 and are slated to remain capped through 2025. This means many people may not be getting a tax benefit for all state income taxes paid. Moving to a no- or low- income tax state during retirement may be more appealing. Nine states do not have an income tax:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
This week’s MoneyDo: Review the following factors when looking at moving to a tax-friendly state.
Consider What It Takes To Leave
Before you make the switch to leave your home state, be aware of what the state uses to determine your legal residence for income tax purposes. The Wisconsin Legal Residence Questionnaire asks if you changed your driver’s license, where you vote, where your car is insured, and what your future intents are. Wisconsin typically requests the form with your tax return in the year you change your residency.
Consider What It Takes To Establish Residency
Depending on what state you move to, they may have their own requirement on what you need to file/do to establish residency. For instance, in Florida you’re able to file a Declaration of Domicile, affirmatively establishing your intent to be a Florida domiciliary going forward. Unfortunately, establishing domicile isn’t as easy as completing a form. Please see your advisor for a comprehensive list of action items for establishing domicile in your target state.
Consider If You’ll Be Paying Partial-Year State Taxes
If you’re deducting expenses on your federal tax return at tax time, you may have to file two separate state tax returns when you move out of state. If you earned income in two different states during the year, unless you’re moving to or from a state that does not collect individual income taxes, you’ll need to file a return in each state to cover the time you lived there.
Consider Changes To Insurance
If you’re changing jobs, consider your individual or new employer-sponsored insurance options, like life, health and disability insurance. Ask your private insurance provider about coverage for your cars, any items you have in storage, and your residence to make sure you’re covered during your move.
Talk with your financial advisor about any insurance policies you have to see if they still apply to your change in circumstances. Sometimes, a change in insurance coverage is necessary when you move someplace new.
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