Robert A. Bonavito, CPA PC

Should I Change My Residence for Tax Reasons?

My name's Robert Bonavito, New Jersey forensic accountant. This video is part of a series of videos where I discuss forensic accounting topics for educational purposes only. We do a lot of work with clients planning on changing their residency because they want get out of the high tax northeast and move down to low tax states for federal state and estate planning purposes, but most people don't understand, it's not as simple as they think. They want all the benefits of the northeast: the climate, the different seasons, the great doctors, New York city, Philadelphia, kids and grand kids, but they want have the low taxes of North Carolina, South Carolina, or Florida. And so what they'll do is they'll buy a house down there or a condo down there, and register down there, and change their insurance, and their car to wherever they are down south. But if you change your tax residence but you get audited by New York or New Jersey, they're not going look at that only. They look at a lot of other stuff to see where you really do live. They'll look at your credit card statements, they'll look at your E-ZPass if you have that, they'll look at your airline tickets. And what happens in these audits is we'll go through the client's information and your credit cards, and you can see that they're going to the restaurants in New Jersey, they're shopping in New Jersey or New York, and if you do a little analysis a [inaudible 00:01:39] analysis, you find that they're spending 9 to 10 months in the northeast, not down in Florida. And what happens is then they get taxed as a New York resident or a New York City resident, and you don't want that to happen. 
So when you want change your tax residence, you have to be careful. You have to understand what they're going look at. It's not as easy as you think, it's complicated, and there's a lot of other things because I know people will come to my office, "I vote in Florida, my car insurance is in Florida, my car is..." I said, "Great, but your credit card statements tell me that you're in New Jersey 10 months a year." I said, "Your E-ZPass tells me that you're in New Jersey 10 months a year. You're going be considered a New Jersey resident." So be careful. If you have any questions on this video, feel free to email me.

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