Switching states for tax purposes
01-13-2010, 04:59 PM
#1
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Joined APC: Jun 2007
Posts: 45
Switching states for tax purposes
So I recently figured out that if I used my parents address in California as my permanent residence (which I've done in the past) instead of my current address in New York I would save over $1200 a year in taxes.
First off am I correct in understanding that pilots can and often do pick whatever state is most favorable to them tax wise to call their place of "permanent residence," as long as they have an address in that state to claim as home? Like for example if I live in Colorado but commute to JFK I can call my self a resident of CO and pay (lower) taxes there. On the other hand if I live in CO but commute to DFW and have a crash pad there I can call my crash pad my permanent residence and pay no state income tax. Have I got my assumptions right so far?
Now in my case my wife works a 9-5 in NYC and we both live and currently pay taxes here. Is there any way that I could claim my parents address as my own and pay taxes there even though my wife, I would assume, has to continue to claim residence and pay taxes here because of her 9-5?
First off am I correct in understanding that pilots can and often do pick whatever state is most favorable to them tax wise to call their place of "permanent residence," as long as they have an address in that state to claim as home? Like for example if I live in Colorado but commute to JFK I can call my self a resident of CO and pay (lower) taxes there. On the other hand if I live in CO but commute to DFW and have a crash pad there I can call my crash pad my permanent residence and pay no state income tax. Have I got my assumptions right so far?
Now in my case my wife works a 9-5 in NYC and we both live and currently pay taxes here. Is there any way that I could claim my parents address as my own and pay taxes there even though my wife, I would assume, has to continue to claim residence and pay taxes here because of her 9-5?
01-13-2010, 05:09 PM
#2
Banned
Joined APC: Sep 2009
Posts: 20
Tread lightly. It's not worth the headache for $1200. Find a CPA, a good one can easily save you the difference.
Article: Third Northwest pilot convicted of tax evasion.(NEWS) - Star Tribune (Minneapolis, MN) | HighBeam Research - FREE trial
Article: Third Northwest pilot convicted of tax evasion.(NEWS) - Star Tribune (Minneapolis, MN) | HighBeam Research - FREE trial
01-13-2010, 06:32 PM
#3
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Joined APC: Apr 2007
Posts: 82
Do not play games with state taxes
Do not do it. Your state of residence, and your tax obligation, goes to where you physically live, not where you have your mail sent.
Geddy beat me to it, but Minnesota is notorious for going after NWA pilots playing fast and loose with state residency. I would not be surprised if New York and California, two other high-tax (and out-of-money) states were just as vicious about enforcing their tax laws. You do not want to end up on the wrong end of a tax enforcement action, esp. if it turns criminal.
If you want to live in a low tax or tax-free state, great, go live there and commute to work. But you have to actually live there.
Talk to a lawyer about the residency requirements for the state where you want to live. Generally speaking, you have to "live" in your state of residence for more than half the year (183 days). How each day is counted depends upon the state law. Be very careful.
Geddy beat me to it, but Minnesota is notorious for going after NWA pilots playing fast and loose with state residency. I would not be surprised if New York and California, two other high-tax (and out-of-money) states were just as vicious about enforcing their tax laws. You do not want to end up on the wrong end of a tax enforcement action, esp. if it turns criminal.
If you want to live in a low tax or tax-free state, great, go live there and commute to work. But you have to actually live there.
Talk to a lawyer about the residency requirements for the state where you want to live. Generally speaking, you have to "live" in your state of residence for more than half the year (183 days). How each day is counted depends upon the state law. Be very careful.
01-13-2010, 07:14 PM
#4
Gets Weekends Off
Joined APC: Mar 2008
Position: FAA 'Flight Check'
Posts: 13,837
Originally Posted by Bumm
So I recently figured out that if I used my parents address in California as my permanent residence (which I've done in the past) instead of my current address in New York I would save over $1200 a year in taxes.
First off am I correct in understanding that pilots can and often do pick whatever state is most favorable to them tax wise to call their place of "permanent residence," as long as they have an address in that state to claim as home? Like for example if I live in Colorado but commute to JFK I can call my self a resident of CO and pay (lower) taxes there. On the other hand if I live in CO but commute to DFW and have a crash pad there I can call my crash pad my permanent residence and pay no state income tax. Have I got my assumptions right so far?
Now in my case my wife works a 9-5 in NYC and we both live and currently pay taxes here. Is there any way that I could claim my parents address as my own and pay taxes there even though my wife, I would assume, has to continue to claim residence and pay taxes here because of her 9-5?
First off am I correct in understanding that pilots can and often do pick whatever state is most favorable to them tax wise to call their place of "permanent residence," as long as they have an address in that state to claim as home? Like for example if I live in Colorado but commute to JFK I can call my self a resident of CO and pay (lower) taxes there. On the other hand if I live in CO but commute to DFW and have a crash pad there I can call my crash pad my permanent residence and pay no state income tax. Have I got my assumptions right so far?
Now in my case my wife works a 9-5 in NYC and we both live and currently pay taxes here. Is there any way that I could claim my parents address as my own and pay taxes there even though my wife, I would assume, has to continue to claim residence and pay taxes here because of her 9-5?
USMCFLYR
01-13-2010, 08:02 PM
#5
Gets Weekends Off
Joined APC: Jul 2008
Position: 747 Captain (Ret,)
Posts: 804
If your parents lived in Nevada or Texas, states with no income taxes, this might be worthwhile trying. For California, no.
You need to do more than say you live there. Register to vote, change your drivers liscence and car liscence, rent a place to live with a lease, register as a student at a local junior college for one course and attend some classes. If you do all this you can probably get away with it, but you also probably will not save any money. The fact that you are based in New York really hurts your chances. If you bid ORD and commute, it would be fairly easy to claim Illinois as your tax home, and IL has only a 3% income tax.
Joe
You need to do more than say you live there. Register to vote, change your drivers liscence and car liscence, rent a place to live with a lease, register as a student at a local junior college for one course and attend some classes. If you do all this you can probably get away with it, but you also probably will not save any money. The fact that you are based in New York really hurts your chances. If you bid ORD and commute, it would be fairly easy to claim Illinois as your tax home, and IL has only a 3% income tax.
Joe
01-14-2010, 02:21 PM
#6
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Thread Starter
Joined APC: Jun 2007
Posts: 45
Sounds more complicated than I thought. I have been hanging on to my CA drivers licence and car registration for the time being, mostly because I haven't been able to afford the fee's to move everything over (with a class A CDL and endorsements it adds up). Guess I'll have to let it go and deal with the taxes. Its pretty ridiculous though, my local taxes here are 3 times what they were in CA.
05-25-2011, 11:28 AM
#7
Guest
Posts: n/a
Originally Posted by joepilot
If your parents lived in Nevada or Texas, states with no income taxes, this might be worthwhile trying. For California, no.
You need to do more than say you live there. Register to vote, change your drivers liscence and car liscence, rent a place to live with a lease, register as a student at a local junior college for one course and attend some classes. If you do all this you can probably get away with it, but you also probably will not save any money. The fact that you are based in New York really hurts your chances. If you bid ORD and commute, it would be fairly easy to claim Illinois as your tax home, and IL has only a 3% income tax.
Joe
You need to do more than say you live there. Register to vote, change your drivers liscence and car liscence, rent a place to live with a lease, register as a student at a local junior college for one course and attend some classes. If you do all this you can probably get away with it, but you also probably will not save any money. The fact that you are based in New York really hurts your chances. If you bid ORD and commute, it would be fairly easy to claim Illinois as your tax home, and IL has only a 3% income tax.
Joe
06-16-2011, 10:35 AM
#10
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
It has long been the custom of Military members to select a tax free state as their home of record. This is allowed under law.
The choice of state of residence can have a very large impact on lifetime earnings, doing this carefully and legally can increase your lifetime earnings by 10-15%. Possibly more, depending on the particulars.
The choice of state of residence can have a very large impact on lifetime earnings, doing this carefully and legally can increase your lifetime earnings by 10-15%. Possibly more, depending on the particulars.
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