There will still be states that lose out I would imagine.
I feel like I’m missing something, though. What about state’s rights? How do federal legislators have the right to determine how states choose to tax?
@BunsenBurner, I think one would pay tax on one’s Massachusetts income, which in my case would be very low if my c-corp changed is domicile.
@notrichenough, I think Massachusetts also makes it hard to leave. You have to demonstrate real changes if you are challenged:. Drivers license and car registration per @jym626, church or synagogue, utility bills, etc. Do you have a new house? Did you sell your old one? Are your advisors local or from the old sate.
@doschicos I would guess the interstate commerce clause would give the Feds the right to regulate this, as it involves people crossing state lines. I don’t claim to be a constitutional scholar though. :-?
Establishing residency in another state is much more involved than changing address for your business. I live in CA and a few of my friends have moved to Nevada, Wyoming, Texas and Florida to save taxes. A friend whose husband is an estate attorney explained that you have to prove you actually live in your new state. That includes grocery bills, gas receipts, utility bills, restaurant receipts etc showing you are physically in that state. You cannot have any credit card receipts from (in my case CA) your state for 6 months.
Both my kids live in NYC and have remarked that they could live like royalty if they brought their incomes to Florida or Texas. I am not ruling out moving to Florida part time down the road if my kids remain in the east coast.We will still maintain our apartment in Manhattan though.
I live in Ca and one of my neighbors just leased his house and has bought a house in Tennessee where he plans to live just over the 6 months a year. I don’t know him well but I think both spouses have jobs they can work at from anywhere.
My H is ready to retire but it won’t happen for awhile. He has cut back his time in the office the last several years. He is thinking about hiring another employee part time to help transition his responsibilities to his present assistant. It’s our company so even once retired he will still be involved.
@cbreeze, that’s what I’m seeing. The move has to be real and one has to take lots of steps to make it so. That doesn’t mean one can also be in/visit the old state (just less than half the year, which would be very easy for me since I’m probably not in the state half the year anyway). Like @mom60’s friends, I can work from anywhere as long as there is good broadband and a good airport. In my case, there is very little actual Massachusetts income. Other than a couple of clients, my primary income from Massachusetts is a salary/bonus from a Massachusetts C-corp that I own that could easily be domiciled elsewhere and whose income doesn’t come from Massachusetts. If I were to do this, I would set it up over a couple of years and get all details in place.
My friend still has his condo in NJ, and is renting in FL this year. He leased a car here, has FL tag, registered to vote, and joined the art museum, got a beach pass, and joined some other club. His lawyer suggested joining groups, and all are $50-75. He works from home, so he can be anywhere.
FL has a 7% sales tax, so while my friend furnished his apartment from FL, he buys most of his good clothes in NJ.
^ Your friend owes Use Tax to Florida if he didn’t pay sales tax on the clothes and those items are taxable in Florida (which I assume they are since he is buying them out of state).
Use tax is another tax that is widely ignored by most people, and states have almost no way to enforce.
The multi state thing gets complicated. My son lives in NY but splits his time between his firm’s NY and CT offices. I believe his income taxes are prorated between the two states. I’m curious if those states have progressive income tax rates and, if so, if that allows him to pay a lower overall rate as opposed to if it were all earned in one or the other.
DW and I have relocated from Utah (5% income tax) to a no income tax state. We had assumed we could sell our appreciated Utah real estate and only pay federal tax, but have now learned that Utah can tax capital gains on real estate within its borders even if the owners are domeciled elsewhere.
The easy workaround is to do Section 1031 tax deferred exchanges into our new state, thereby postponing the federal tax and eliminating the state tax entirely.
1031 exchanges are for investment and business properties not personal property. You can’t swap your primary residence for another unless you turn your primary residence into a rental property first. But you still cannot exchange it for a primary residence immediately.
Haha, that would be good. DW pays in NY/NJ (and IL, for some obscure reason), and they have progressive rates also, but no such luck 
@cbreeze - That’s correct. Maybe I should have clarified that I was referring to investment property. The capital gain (after the $500k exemption) on the sale of our personal residence was subject to both state and federal taxes. Trying to play the 1031 game with personal residences is possible but, in my opinion, a fool’s errand.
Just wondering about state estate/inheritance tax. Since the states tax is paid by the estate and inheritance by the heir, does that mean the estate tax will follow the state law where the estate is and the inheritance the state each heir live?
Looks like the market is gonna tank today…
IMO, the stock markets and the commercial real estate markets are fully valued, and the long awaited inflationary pressures are finally materializing. In this environment, rising interest rates seem imminent, putting downward pressure on stock, real estate, and bond prices.
The party might be coming to an end.
I was reading this weekend that in some states like CA, if you live there it establishes “nexus” for your C-corp regardless of where it is domiciled or where the revenue is sourced, and the company is subject to taxation by that state. And even for other states, you have to establish some sort of nexus to where the corp is domiciled (like having employees there, owning property or inventory, etc) or the company will be taxed by your home state. So if you want to move the corp to Nevada or some other income tax-free state, it’s harder to avoid taxes than just registering and having an address.
Something else to think about…
Ouch!
I would love to claim brilliance, but it was just dumb luck that I, a week ago, sold a bunch of funds to raise cash for something we are doing.
Lots of capital gains, but stil overall happy.
It was dumb luck that we did not plunk the cash from the sale of our house into stocks. We missed some $$, but today would have brought us into negative territory for sure.
I was away most of January. I am picking up where I left off at the end of December. It hasn’t changed that much from where I sit.