Practice Update

It's Trickier Than You Think, Even for the President
In a tweet on October 31, 2019, the President announced that New York “will always have a special place in my heart!” While there may be political reasons for relocating to Florida, he is taking a path that many other northerners have taken before him to save big on taxes.

President Trump's “Declaration of Domicile” statement filed in Palm Beach County Circuit Court in September is a necessary step toward eliminating his state and city income tax of 13 percent, and just as important, if not more important, avoiding an estate tax of 16 percent. However it will take more than filing a form to convince auditors that one’s legal residence has changed. The migration of taxpayers from high tax states like California, Illinois, New Jersey, and New York accelerated starting in tax year 2018, after Congress adopted legislation capping an annual deduction for state and local taxes paid at $10,000 for individuals.

High-net-worth individuals leaving New York1 are permitted to say that they are headed to Florida for tax reasons. However, understanding the rules of residency and planning for the necessary steps to take (and for the audit that will probably come) are imperative. The hardest situation to remedy is when someone waits until he or she sells a business and then says, “Now, how can I become a Floridian?”

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