December 7, 2020
With the coronavirus pandemic continuing to impact both consumers and businesses across New York City and the U.S., an increasing number of people are now considering temporary or permanent relocations in search of a solution — and a new home.
But if you’ve moved or you’re considering moving, there are tax implications to consider. From identifying your domicile to understanding your intent, your actions — and location — may have an impact on your tax liability. Indeed, if you’ve either temporarily or permanently relocated, it’s important that you comprehensively evaluate any tax implications both before and after your relocation.
Here are some things to keep in mind. And as always, Perlson’s professionals are here to help if you have questions or need assistance.
Domicile & Tax Considerations:
Domicile - At its simplest, domicile refers to where you live or where your business is physically located. But domicile can also be much more complicated than that. And not only where you live, but also where you conduct the majority of your daily activities, where your doctors are located, and even where you spend most of your time, can have a major impact on your tax burden. It’s important to always speak with a Perlson professional about both your short- and long-term goals to fully understand the benefits of your move and what could be at stake.
Tax Considerations: Although domicile can have an impact on your income tax, it can also affect property, gift, and even estate taxes. Be sure to speak to a Perlson professional to discuss the implications of your move to manage taxes.
What is your intent?
Next, you’ll want to examine your intent and its implications on your tax position. Whether your move is permanent or not, your intent needs to be well-documented and substantiated.
Looking for something long-term? If your plan is to permanently relocate to a lower-taxed area, it’s important to take initiative and get started on making your intentions known to tax authorities as quickly as possible. Until you have completed all required documentation, your existing domicile designation remains in place. In long-term moves, the quicker you act, the more you save.
Only want something short-term? If your relocation will be short-lived, and especially if you’re staying in another jurisdiction for a bit longer than expected, the main concern you should keep in mind is the possibility of DOUBLE taxation. Depending on local tax regulations, it’s possible you will need to pay taxes in both your main domicile and your temporary location. Proper planning, well-executed documentation, and professional insight can save you significant sums in this case.
If you need help with any of these complicated issues, the Perlson team of professionals is here to help. Contact us at 516-541-0022 or visit our website at Perlsonllp.com for more information.
New York State has launched a program that aims at helping you secure the funding you need.