How To Establish Florida Residency

Everyone knows that Florida is a great place to live, with its warm climate, beautiful beaches, and sunny skies. And what many people also know, it’s a great place to retire, or just start fresh in a new and uplifting location. Why? In a word, taxes, or better said, the lack thereof! Florida has no personal income tax, which means you can keep six to thirteen percent more of what you earn, especially compared to such high tax states as New York or California. And that’s not all.


Florida has no estate tax, so when you die, more can be passed on to your heirs.  But establishing Florida residency is just half of the story. While there are specific rules for establishing domicile in Florida, you also have to take steps to make sure that you will no longer be considered a resident of the state you are departing. There have been cases where clients have been considered to be residents of Florida AND the state they departed (New York State is famous for taking this position). That means the former state may continue to make claims for state income or estate taxes, including filing liens or garnishing financial accounts. It is therefore extremely important that the correct steps are taken to sever residency status from your former state. This is a two part process then, and it is critical to know what is required under each part in order for you to be successful.


Many Northern states will apply both a “Statutory Resident Test” as well as a “Domiciliary Test”. The Statutory Resident Rule is the one that most people who relocate to Florida are familiar with. This is the perception that as long as one lives in Florida “183 days or more” then Florida residency is established (and the departed state residency is terminated. But, it is not that easy. The burden is on you to prove the number of days you spent outside of your former state. For example, states can challenge your location days by reviewing charge card or telephone records.


Where the Statutory Residency Test focuses on just your residence and the number of days in each state, the Domiciliary Test focuses on five distinct areas including your physical residence, the number of days spent physically within each state, your place of business, connections that are “near and dear” to you, and finally, the location of your family members. These rules can be complex and subtle, so proper advice is key.


We can help you navigate the transition of your business from your current state to Florida, by guiding you through the maze of entity selection, tax structures, employment and sales taxes, business registrations and licensing, residency issues, and all of those details that can seem overwhelming.


With over 32 years of experience, let Caruso and Company, CPA, PA help you make more money, and keep more of what you make. Call us today for a free consultation, and browse our website for more detail on the services we offer and see what some of our clients have to say.