Vacation Homes Can Raise Your Tax Load

Vacation Homes Can Raise Your Tax Load

People who spend a lot of time relaxing in one state while calling another home can trigger state income tax in both. A common way to go wrong is to hold on to a condo and social connections after moving away to a tax haven such as Florida or Nevada.

No single thing proves a person lives in one state or another, so it is important to take several steps to guard against being doubly taxed. Keeping good records and making sure to register properly for important activities such as voting and driving is a start.

Retirees who have migrated from high-tax Northeastern states such as New York, New Jersey and Massachusetts to Florida are among folks most affected. Many start out with the best of intentions, but the urge to be near family can prompt them to spend a bigger chunk of the year than intended in their old haunts.

It is best to err on the side of caution when documenting the move to a different state. The first thing is to change all legal documents to reflect it.  Passports, voter registrations, automobile registrations and driver's licenses should show the new state as residence, said Mr. DiQuollo. Federal income-tax returns should be filed from the resident state and mailed to a corresponding regional tax office. Financial reports should be addressed to the resident state.