How to Take Advantage of Florida’s 0% Income Tax
By Space Coast Daily // March 26, 2019
If you live outside of Florida and are getting increasingly annoyed over how big a chunk your resident state is taking out of your paycheck, you might want to consider moving.
“Is it really that easy?” I hear you ask. Indeed, it is. There are seven states that don’t tax its residents on income: Alaska, Wyoming, Nevada, Washington, Texas, South Dakota, and, of course, Florida.
Florida’s state constitution forbids any imposition of an income tax. Of course, each of these states has to make up that money somehow in order to pay schools, roads, and more.
Therefore, other taxes are higher. For example, you’ll see that Texas has some of the country’s highest property taxes. Then there’s Florida with its higher-than-average sales tax, which you would need to bear in mind.
So, what kind of things would you pay income tax on and what would you get away with? You can take advantage of Florida’s Income Tax by live trading, because daily trades are classified as income.
Earnings from day trading would be subject to income tax no more than if those earnings came from regular employment. When it comes to investment income, on the other hand, it depends on whether you’re an individual or a business.
As investment income is still income, you wouldn’t be charged income tax as an individual. As a corporation, however, you would be subject to corporate-level income tax on its income.
Sunshine Tax Break for Entrepreneurs
Two individuals who made the move to Florida for tax reasons are making quite the savings. One is entrepreneur and New York Times best-selling author Grant Cardone. He made the move in 2012 and in the following year, saved $1.3 million. That, according to Cardone, was enough to cover his rent for four years.
The other gentleman will be a name sports fans will be familiar with: Chris Bosh. While Bosh had to forfeit a portion of his salary when he was traded to the Miami Heat from the Toronto Raptors in 2010, he saved a whole of money on each home game he played for the Heat. It wasn’t just Bosh who benefited, either.
The Heat didn’t have to pay him a salary he would have commanded in other states and it was a strategy they repeated with other players to build a team the rest of the league could only look at with envy.
The Heat were also able to attract none other than Lebron James and Dwayne Wade this way. It can benefit businesses, not just individuals.
A Win for High-Earners
Simply put, the more you earn, the more you’ll save on income tax by moving to Florida. Even with a high sales tax, your high income would counter much of it and so wouldn’t be hugely affected. Avoid spending too much on shopping and you can keep the effect of a high sales tax down even more.
So, while other taxes come into play, if you play a smart game, you can save money by relocating to Florida. Of course, you could always move to Alaska but Florida is like to win any weather war between the two states.
How to Do it
Before you set off on a life of reduced tax in the Sunshine State, you’ll need to become a resident. In order to do this, you’ll need to go through a process to establish either domicile and residency.
The lines between the two are blurry. Domicile says that you wish to stay permanently while residency indicates your stay will be on a more temporary basis.
Domicile and residency laws vary depending on which state you’re considering moving to. If you’re seeking residency in Florida, you wouldn’t be able to spend more than half the year in California, for example.
You’ll also need an official address, which will mean you changing your bank account, driver’s license, or voter registration. Such records will show that you’re intending to stay rather than just visit. And with all those income tax savings, I assume you’ll be wanting to stay.
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