Southern States a Tax Lure for New Jersey Residents?

 Where is a retiree to go? If Florida is possibly becoming more expensive as I blogged about in  Moving From Florida?? A Reverse Trend that May Prove Expensive for Residents, and if New Jersey is too expensive as I talked about in Taxed Enough? Looking at Leaving NJ? Domicile and Residency are Key Questions, where is good.

Well, apparently both Georgia and Alabama are vying for your business.  Bizjournals.com reports that Peach State is Great for Retirees and Alabama is Tax Friendly for Retirees.  North Carolina is in the mix too with Kiplinger: N.C. ranks high for retirees

All three states have low income tax, low property tax, and limited or no state level estate tax.  It costs less to live and less to die.  I told a story earlier where being a North Carolina resident saved a client $230,000 in estate taxes.  So what do ya'll think about moving south of the Mason Dixon line?

Taxed Enough? Looking at Leaving NJ? Domicile and Residency are Key Questions

It seems that my in box is full of information on better places to live than New Jersey from a cost perspective (personally, I love the shore and NYC and Philly and skiing all being within 2 hours drive). I got a very thoughtful piece from my friends at RegentAtlantic Capital entitled "When You've Paid New Jersey Enough".  In the article, Bill T. Knox, "reviews the key factors that should determine whether someone who has lived in NJ and then establishes a home outside the state will be successful in escaping the state’s income and death taxes."  

Bill looks at New Jersey domicile and residency from the income tax and estate and inheritance tax perspective.  Domicile is a very tricky question - it is where you intend to be without intending to move.  So if you intend to be an Florida resident, but keep your New Jersey home and all your bills coming here, did you really leave New Jersey domicile?  

And why does domicile matter?  Well, New Jersey income tax applies to all income earned by New Jersey "residents", and the New Jersey Estate tax is levied against a New Jersey resident who dies.  Clearly, if there is a question, New Jersey would like to claim that you live here and you should pay here.  So, if your domicile and residency are supposed to be elsewhere, you need to make sure that you have dotted all "i's" and crossed all "t's" to make that happen.

Quick story - A client of mine died January 1, 2009.  She had changed her residency and domicile to North Carolina in the year before her death.  Her estate is approximately $3.5 million.  Had she dies a New Jersey resident she would have owed New Jersey approximately $230,000.  As a North Carolina resident, her estate tax bill is $0.00.  How is that for some effective Estate Planning???

In "When You've Paid New Jersey Enough" Bill provides a quick checklist of key domicile and residence issues.