Relocate To Florida Or Alaska To Steer Clear of Additional Taxes In Retirement
When retired, you can accomplish anything you want to do. But it also means you will be living on a fixed income, so cutting corners where possible is a necessity. The taxes you pay the IRS are no exception. You can either claim every possible deduction that you can claim legally, or relocate to one of the nine income tax-free states. If that is not sufficient, you can even move to any of the five states that do not charge sales tax.
Among the states that fall into both of these categories is Alaska. Considering these two requirements, Alaska would be the perfect to state to move to during your retirement. Obviously, the climate is a substantial adjustment for many people. So if you can get over the wild weather in the 49th state, it might seem like the perfect area to retire and pay less in taxes. In truth, Alaska isn't as completely tax-free as it appears to be at first look, and could possibly lead to IRS problems, or simply a financial issue.
Particular municipalities collect local sales tax, though the state doesn't collect it. There are some boroughs, which are basically counties and cities, that collect property taxes. But if you're 65 or older, then your initial $150,000 will be exempt. Also, Alaska presently has an estate tax. If you are concerned about what your children will receive from you as inherintance after the government takes its cut, this can be a severe problem.
Obviously, it is not advised to choose a place to retire based on taxes. It is natural to be concerned about real estate and income taxes, however, particularly when you're existing on a fixed income. You must understand that real estate taxes tend to increase when your income decreases, meaning you'll be getting less money but paying more for your home. Also, you might want to determine how your property taxes will increase if you renovate your home to avoid IRS problems.
Indeed, many people decide that they would rather not fret about the upkeep and maintenance of a big house and instead, choose to live in a small apartment. Choosing this option means that they will not be asked to pay any property taxes, but if they are getting a substantial income from pensions and other sources, they may end up needing to pay considerably higher income tax rates. This is primarily decided by where your money comes from and not where you opt to live, whether it's Alaska or Florida.
States such as New Hampshire, Alaska, Tennessee, Florida, Wyoming, Nevada, South Dakota, Washington, and Texas don't collect income tax. But income derived from stocks or bonds are charged with taxes in states such as New Hampshire and Tennessee. These are two income sources that most retired people get funds from as soon as they quit their regular jobs.
Darrin T. Mish is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He teaches attorneys, CPAs and Enrolled Agents in the finer aspects of IRS representation all around the United States. He can be reached at his website at http://www.getIRShelp.com
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