Thinking about relocating to a new state? (Come to Arizona! It’s a dry heat!) There’s more to consider than housing and employment opportunity. Differences in state tax laws are often overlooked but equally important. Here are a few tax items to keep in mind while you’re packing your boxes.
What are the college savings 529 plan options for your new home state? Are contributions deductible? Does your new state require an investment in their state plan?
Will your new state tax the employment stock options, and deferred compensation earned in another state? Will your old state keep taxing you even after you’ve left?
What about capital gains? Do you want to recognize income in your current state before you leave if it has a lower or no tax rate?
If your new state has a lower income tax, does your previous state have recapture rules allowing it to tax any future income if you wait to sell until after you’ve moved?
Will your new state credit any income tax you’ve already paid to your current state, especially if income is taxable to both states?
Consult with your financial planner to ensure all your estate and trust arrangements are still applicable and takes advantage of your new state’s tax laws.
Also, you won’t want to forget to:
Purchase home insurance. Contact your current policy holder to see if you can transfer your policy to your new home. If you’re moving to a state with unique weather conditions, consider adding additional coverage.
Transfer your life insurance. Some insurance companies aren’t licensed in all states so be sure your coverage can move with you.
Find a new doctor, and for that matter, a new healthcare policy as a lot of health insurance companies either don’t cross state lines or don’t offer the same coverage state to state.
Moving can be exciting! It can also be less of a hassle if you’re prepared. Making sure you understand the tax environment of your new home ahead of time can help make your move as smooth as possible.
If you have any questions about relocating to Arizona and the state’s tax environment, feel free to contact a Henry+Horne tax professional.