Skip to comments.Minnesota's wealthy caught in a tight tax net over residency
Posted on 04/19/2014 9:19:32 AM PDT by TurboZamboni
Its getting tougher for Minnesotans to avoid the states taxes by spending part of the year somewhere else.
Snowbirds and high earners are discovering that they must do more than buy a condo in the Sun Belt and register a vehicle there, after a court decision last year reinforced the states ability to use any of more than two dozen criteria to determine who is a Minnesota resident.
People refer to it as Hotel Minnesota, said Matt Shea, a lawyer at Gray Plant Mooty. You can come any time you like, but you can never leave.
To determine tax residency, the state is looking at such things as where people vote, whether they mostly use Minnesota bank accounts and whether they go to the doctor here or in another state. Accountants and lawyers are advising clients who want to avoid Minnesota tax to sell local property and businesses if possible, and definitely to spend less time here than wherever they plan to claim as their new home state.
(Excerpt) Read more at startribune.com ...
Guess they’ll just stay in Florida then.
They spent their employment years in the union voting rat, but first chance they get, move to Florida.
“the state is looking at such things as where people vote, “
Probably both places.
Are you a Minnesotan? The answer may surprise you.
No one has ever said how many Minnesota folks play this dual-state status. From my three years in Tucson....I had the feeling that I bumped into a Minnesotaite almost daily after 1 October, and rarely saw any of them after March. It’d be curious to know how many of them leave for the winter.
that is all that matters, isn't it?
Maybe he’s the guy with signs in his yard and the pickup truck with the Don’t tread on me (Gadsden) flag on it.
I've set foot in Minnesota once.I spent three nights there (in a hotel).I don't anticipate ever setting foot in the state again.I'd be surprised,to say the least,if Minnesota ever tries to claim me as a "resident".But then,you never know with leftists.When I make my move to New Hampshire and Florida I anticipate at least some trouble from Gay State tax officials.My Dad,who had a healthy income and net worth thanks to hard work and frugal living (he was a child of the Depression),had enormous trouble from the Gay State when he made his move to Florida.But he prevailed...after spending thousands on a lawyer.
As with most rules, they come about because a few folks abuse the freedom they have. When someone follows ‘the letter of the law’ they are playing the government’s game. If you are an ethical person you don’t need to try and shade things and skate on the edge to save a few bucks.
If you have enough money that you can afford to play these games over taxes then I don’t have a lot of sympathy for your ‘plight’.
Me, I am just one of those poor middle class dupes that works hard, votes, and actually lives where I say I do
Read the story....
Where you vote is only part of it...this shell game that some play to minimize their taxes, while legal, ends up hurting everyone. And now the draconian rules are made to punish a few who will never feel the effects of it
“Guess theyll just stay in Florida then.”
I think for the most part they live close to family and have maintained a vacation home elsewhere. I understand you have to be out of California for 18 months before you can avoid state income tax. Even then, if you’re still a member of a church or have a bank account there, you’re taxed. Eventually, all of the harshest rules will be universally applied.
I interviewed with a CEO who runs a company in Florida, but whose wife lives in New Jersey close their kids. He fly’s home on the weekends. He said the audit was hell and they made the argument that even though he owns a house in Florida he really lives in New Jersey and commutes to Florida. I don’t know how it came out.
It won't generate the money they expect because enough of the the targeted wealthy will likely flee to a low tax state, or make certain they don't meet the residency criteria.
So that projected $1.1 billion may actually end up being lowered by a half to two-thirds. Then the state will complain that revenue is down and they have to raise whatever taxes/fees the legislature thinks they can get a pass on from the voters.
Another great example of American tax policy; raising tax rates that REDUCE tax receipts...which result in MORE tax rate increases. Insanity!
Just one more reason I hate this state and can’t wait to get out.
9.85% state income tax rate has to be one of the highest of the 57 states, no?
just like owning multiple property in my own state, i couldn't vote in another town that i owned property in because i don't live there even though i pay village/town/county/school property taxes there
The problem with residency for retirees is often complicated. The rules vary from state to state, and are sometimes contradictory about where to get a driver's license, where to vote, what taxes are owed where, how medical plans cover expenses and care in a second state.
I try to keep things simple. If I were to spend extended time somewhere else, I'd rent, and keep my footprint in that other area as minimal as possible. I'm upper-poor, so OH tax isn't that bad a burden as a retiree.
It's not about rich and poor - it's about states and the Federal Government through tax laws and legislative obscenities like NAFTA attempting to claim ownership of your productive output, and thus, your person.
If they aren't stopped cold - right now - they'll get down to your level, eventually.
Can’t wait to leave. Two months and counting.
IIRC, MN is now is 4th highest in the US.
We will get a lot here in NC as "half-backs".
They move south to Florida, discover that it is hot in the summer and then move half-way back to the North...
Given the typical 183 day residency rule, what happens if one has three residences in three different States. Can one be not a resident of any State of territory?
Given the typical 183 day residency rule, what happens if one has three residences in three different States. Can one be not a resident of any State or territory?
Actually you only end up with an issue in CA during the year of split residency. I was transferred to MD from CA. I documented how much was earned in each state and filed appropriately. It helped that it was a clean break (no residual houses, cars, or voting). I kept a small account open by accident, but that was not a problem. I had adequate documentation to show that I had clearly moved.
What I did see in CA was people working in CA and declaring legal residency in NV. It works pretty well if you follow the checklists and behave yourself.
Unlike moving to a foreign country, establishing residency in Puerto Rico has some tax edges.
My company tracks my labor hours by zip code and allocates
state income tax accordingly. I’m an Idaho resident.
That’s where my home, family, property and voting
is done. California gets a large portion of state
income taxes. Nebraska will get some this year as
well. The multi-state income tax filing is a real
pain in the butt.
First of all, THANKS to you TurboZ for keeping us updated on MN.
MN has to keep their Somali population on bennies by sharing the snowbird monies.
Why would they live in Minnesota?
Combine that high tax scenario with global cooling and you have a recipe for declining population....
You and I agree. Where you vote is where you should live......and it is where you should pay taxes
If you have multiple places that you have a place to lay your head a night you are more than ‘upper poor’. Most folks IF they even get to retire have one place they call home.... not one for the summer and one for the winter
I didn’t say it was about rich and poor. I did suggest that some folks have enough money to do as they wish.... and if you one a home for summer and a home for winter (which is what snow birds do) then you are in the status of having enough to do what you want. You are not eating casseroles, deciding whether you have enough to go to the doc, or any of a dozen other things. Understand clearly, I am not complaining about the fact that these folks have worked hard to get to where they are. they have used legal means to do so. My comments were meant to indicate that there is a difference between what is legal and what is ethical.
To bring NAFTA into this discussion is so far off the wall I won’t even comment on it.
I lived in California several decades ago. The state of California set up a FIELD OFFICE in Las Vegas. The purpose was to find California retirees in Nevada and make them pay California income tax, even though they no longer lived there. The claim was that they earned their pay in CA, had it tax-deferred income there, and therefore needed to pay taxes later, regardless of where they lived.
I was in my 20s, but I knew that it was time to skedaddle, and I went to Texas as fast as I could. One could argue that CA had a point, but I didn’t care to find out either way. If they had that attitude, I wanted NOTHING to do with them.
From my profile page:
...my FR "nom de guerre" is a play on the official nickname of Massachusetts (The Bay State) and the recent decision by the Chief Justice of our Supreme Court,Margaret Marshall (a South African who's married to that Fellow Traveler at the NY Times,Anthony Lewis) that homosexual marriage is guaranteed by our Constitution...thus,"Gay State Conservative".
Its even worse if you are an expat...if you spend 38 days in the US its as if you spent the whole year here. Thus all your income earned abroad is subject to US income taxes.