Thinking of Relocating? Beware If Moving to a Low-Tax State
In this video, Kevin Gormley, CFP®, CPA, PFS and Jason Reagan, CFP®, RICP from Leading Edge Financial Planning discuss the growing trend of relocating from high-tax states to low-tax states and the critical risks that come with it. With more people making these moves, states like California and New York are stepping up scrutiny. From proving intent to audit triggers you might not expect, this video explores the legal, financial, and logistical hurdles that could cost you thousands in back taxes and penalties (up to 50% in some cases).
They reveal how states are leveraging AI, credit card data, and mobile phone records to challenge residency claims and why updating licenses, estate planning documents, and your overall footprint is essential. If you’re a high-income professional considering a move, this is your guide to doing it right.
Key Topics Covered:
- Moving from High to Low Tax States: Introduction and Motivation
- Patterns of Migration and Tax Revenue Impact
- Intent and Proof of Domicile
- Practical Considerations and Potential Pitfalls
- The Role of Attorneys and the Cost of Audits
- Final Thoughts and Recommendations
Actionable Takeaways:
- Keep detailed documentation of your residency change
- Weigh potential tax savings against audit risks and hidden costs
- Assess whether the move aligns with your overall family and financial strategy
- Consider consulting an attorney familiar with residency audits in the state you may be leaving
- Evaluate if tax savings may justify the legal and financial effort of proving true residency
- Pilots considering a second home in a low-tax state may need legal guidance if planning to claim it as a primary residence
Tax authorities are using advanced tech to close gaps, make sure you’re a step ahead. Understanding the rules may help you avoid an expensive audit and preserve your long-term wealth.
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