Are you looking for warmer weather and lower taxes? Michiganders have often headed to Florida in the winter and some move there permanently in their later years. But many Michiganders may want to retain relationships and enjoy the summers in Michigan and maintain a second home in Florida. Florida has no income tax so that offers an incentive to declare that your residence, but it can be tricky if you keep two homes as Michigan won’t want to give up your tax dollars. And proving that you are suddenly a Floridian isn’t simple.
There isn’t one easy step or document that establishes Florida or most other states as your new residence. There are a lot of things that you should do if you want to make a good case to Michigan that you no longer need to pay income taxes there.
If you buy or lease a property in Florida, you can start by filing a formal declaration of domicile with your county clerk. Like Michigan, Florida offers a Homestead property tax break for your primary residence and the declaration is one of the first things the property appraiser may consider to determine if you qualify. Getting the Florida Homestead status will help but remember to give up the Michigan Homestead status if you still own a property in Michigan. While you may save on income taxes, your Michigan property taxes will go up without the Homestead exemption.
Next, change your address with the IRS to your new address. You’ll want to determine what your official move date is and then file a partial-year tax return with Michigan. Your tax return will be a bit more complex in that transition year, but it helps to document the date that you changed residency and notifies Michigan of your new status.
Other items include:
• Change your voter registration to your new address.
• Get a Florida driver’s license and change your vehicle registrations.
• Change your address for bank and/or brokerage accounts (even if you don’t get paper statements mailed).
• Have utility bills and other mail sent to your Florida address.
• If you have any professional licenses, change those to Florida.
• Update your estate planning documents to reflect the new state laws.
• Notify Social Security of your new address.
• If you belong to a church, join a local congregation.
• Find a new doctor, dentist, hair stylist, etc. near the Florida home.
• Keep travel records, receipts, and a calendar to show that you spent more time in Florida than Michigan.
Don’t consider this legal advice or a complete list of things that you can or should do to establish a new residency. While saving income taxes sounds great, there are many other financial and non-financial considerations in changing your residency status. If you’d like us to help run the financial impact of taxes and other costs, we’d be happy to help. Contact us.