![]() ![]() However, states don't all agree on what exactly a federal obligation is. States don't make you pay income tax on federal obligations such as Series EE bonds or Treasury notes. Consideration 7: Tax-exempt federal bonds and other investments Review your financial portfolio as part of your move preparations. But if you own the same bond and live in Idaho, you pay Idaho income tax on the income. For example, if you live in North Carolina and hold municipal bonds from one of the agencies or municipalities of the state, you won't pay tax on that income if you are a permanent resident of North Carolina. If you have investments that are tax-exempt for your old state, they may be taxable in your new state. Consideration 6: Tax-exempt state investments from your old state For example, if you receive interest on the accounts receivable in a sole proprietorship you operate in Arizona, and you're a permanent resident of California, you have to pay tax on the interest on your business accounts receivable to Arizona and apply for a credit on your California taxes. However, if the income you receive is part of a business that you have in the old state, both states will tax the income, and you must apply for a credit on your new state's tax return. So if you move from Arizona to California and it's a permanent move, California will tax you on the interest income from your Arizona bank accounts during the time you're a resident of California, and Arizona won't tax you for the same period. Interest and dividend income is generally taxable by the state where you are considered a permanent resident. Consideration 5: Interest and dividend income from your old state Carefully read the filing requirements for each state you lived in before you fill out your return. If you move twice during the calendar year and wind up living in three states, you might have to pay state income taxes in all three states. This might come in handy if you want to carry that loss over to offset some rental income taxable by your old state in the future. However, your new state will most likely allow you a credit for the taxes you pay to your old state because of the rental property income.Įven if you have a loss on the rental and might not have to file a return in your old state, consider filing a return anyway so that you can establish with your old state that the rental property produced a taxable loss. If you rent out your house, you will most likely have to report your rental income and expenses on both your old state and your new state income tax returns. Consideration 3: Renting property in the state you leaveĮven if you establish permanent residency in the new state, if you rent out your house in your old state, you will most likely have to file an income tax return in your old state to report your income and expenses. ![]() If your employer is moving you from state to state and paying for your moving expenses, some of your reimbursed moving expenses could be tax-free, but some might appear on your Form W-2 as part of your taxable income. One other state, New Hampshire, does not tax W-2 wages but does tax dividend, interest and certain business income above certain amounts. Florida (Has no personal income taxes, but does impose taxes on the value of certain business assets). ![]() If you're thinking about relocating but you are not sure where to move, consider moving to a state that does not have state income taxes. Consideration 1: States without income taxes ![]()
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