Establishing Florida Residency
As a state with no income tax, Florida looks increasingly attractive to residents in high-tax states. The tax situation is even more appealing since Congress passed a $10,000 cap on state and local tax deductions in 2017. States generally have two tests to assess residency. To be considered a statutory resident — and taxed as a resident of that state — you had to have spent 183 days there during the year and you must maintain a permanent place of abode there.
However successfully leaving a high-tax state and becoming a Florida resident can be more complicated than just staying 183 days. High-tax states will still attempt to claim you as a resident and auditors will go so far as to audit your cell-phone records to maintain their revenue.
Here are five tips for successfully documenting Florida residency:
- Record a Declaration of Domicile in the county in which you live (be prepared to show moving bills and receipts)
- Maintain a physical mailing address, not a P.O. Box
- Pay applicable property taxes
- Use a Florida address on all legal paperwork, including tax returns
- File for the homestead tax exemption (another nice way to ease your tax burden)
- Obtain a Florida driver’s license
- Obtain Florida tags on all vehicles
- Physically move some valuable household items such as artwork or jewelry to your Florida home – this should also include items you “hold dear” such as family photos and treasured heirlooms
- Can you demonstrate your business is headquartered in Florida?
- And/or in today’s remote and hybrid work environments, that you are conducting the majority of your business in Florida?
- Obtain a primary doctor or dentist in Florida
- Do the same for your pet
- Register to vote in Florida
- Demonstrate that spouses are sharing time together in Florida (even with different work and travel schedules, auditors want to see that spouses come “home” to Florida and spent weekends there), and that minor children are enrolled in school in Florida.
Your 183 Days Explained
Many income tax states from which you are parting ways use a “183 Day Rule,” or a 6-month rule, to establish residency in Florida.
Under the rule, the taxing states require that a person looking to declare residency in Florida must reside in Florida for at least 183 days (in other words, one day more than six months).
However, any time spent in your previous income tax state counts as “a day” if you return for business, family, or other reasons. Auditors caution that for every day spent in your previous state, you want to try and double that in Florida with a minimum of 183 days.
As always, with any tax questions, check with your accountant and financial planner as well as review guidance from income tax states as to what they consider proof of a departure.