Richard J. Harris, CPA – Newport Beach, CA

A few of my more astute California clients have noticed that other states have lower or no personal income taxes. A few of my better off clients have homes in several states and foreign countries. If you have or are planning to change your legal domicile, be sure you do it right. And oh-by-the-way, even if you do everything right, the State of California will aggressively pursue taxation of some intangible asset income – such as pension benefits.

If you are involved with a residency audit you will be asked to fill out an extensive questionnaire. Warning! Do not fill out the questionnaire without professional help.

Here’s a check list for establishing a new legal domicile. The list is not complete and not all items need be present to establish residency. Again beware, fulfilling all of the following items will still not guarantee your residency status.

* Sell old residence and buy or lease one in your new state
* Obtain a homestead exemption in your new state
* Move physical assets to new state
* Sever business relationships in old state
* Sell real property and real property investments in your old state
* Close bank and brokerage accounts and open new ones
* Rent a safe deposit box in your new state
* Have an attorney redraft trusts and wills indicating your new residency
* File an affidavit of domicile in new state with the county clerk’s office
* Register to vote in new domicile
* File all tax returns as a resident of the new state
* Register all automobiles in new state
* Cancel your old drivers licenses and get a new ones
* Change the billing address on all bills
* Terminate all church or temple affiliations and establish new ones
* Terminate club memberships and establish new ones
* Join the local library
* Purchase a cemetery plot in new state
* Keep a log of time spent in your new state, in your old state and on vacations
* Try not to use credit cards when in your old sate
* Talk and dress like the locals. If you are moving to Idaho, buy at least two automatic
weapons. If moving to certain areas of Arizona, buy and carry a six shooter.

Rick Harris Income Tax Advice Income Tax Advice, state residency

People are living longer than ever. What this means for a healthy, active person is whether they think they can outlive the average life expectancy for their age group. If you are willing to gamble that you will do just that, postponing your Social Security benefits until age 70 may return substantial benefits.

Say you were born in 1950. If you take SS benefits at age 62 you will receive about $1,600 per month. Waiting until age 66 gets you $2,200 and at age 70 you get $3,000. After doing all the fancy calculations and estimations, it looks to me that around age 82 those who postponed their benefits until age 70 will have already won on the bet. Living longer than age 82 (not unusual as far as I can see) will garner you substantially more money that if you had taken the money at age 62 and ran to the bank.

The bottom line – if you feel good and feel lucky, wait to draw your Social Security.

Rick Harris Retirement Advice Income Tax Advice

Thank you for visiting rjharriscpa.com, the website of Richard J. Harris, CPA. This site will provide my clients with quick answers to common tax related questions and issues as well as keep you up to date on all news related to your personal and business income tax needs.

Rick Harris Uncategorized Income Tax Advice, Money skills, personal money management