Splitting time between Florida and N.J.

Photo: jackietrains/morguefile.com 

Q. I read your article about determining residency for tax purposes. I have this scenario. There’s a married couple. One spouse is a part-time principal working in New Jersey eight months of the year, and the other spouse lives in Florida eight months of the year. The one in Florida receives a teacher’s pension. Can he be considered a Florida resident and not pay tax on the New Jersey teachers pension?
— Trying to save

A. Residency is a matter of intent.

You have a place to stay in New Jersey and a place in Florida, so the question becomes: Which one is your home?

The answer to that question can be different between the two spouses, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

“There is no rule that says spouses must live together or even reside in the same state,” Kiely said.

He said there are three possible outcomes to your question. The first that one spouse is a New Jersey resident and the other spouse is a resident of Florida resident. Second, you can both be New Jersey residents and third, you can both be Florida residents.

“In the first scenario, if the spouse who works in New Jersey is a New Jersey resident, then that person would have to file a New Jersey Resident return and pay state tax on the New Jersey income,” Kiely said. “If the other spouse was a Florida resident, they would not have to file or pay tax because Florida has no personal income tax.”

If the two of you were New Jersey residents, then you would both have to file a New Jersey Resident tax return and pay New Jersey tax on all your income, including the pension income.

If the two of you were Florida residents, then you would have to file a New Jersey Non-Resident tax return and pay taxes on the pay earned in New Jersey, he said.

“Since Florida has no personal income tax, you would not have to pay tax on the pension, interest, dividends, etc.,” Kiely said.

The estate tax is also one items to look examine.

But in order for you claim of residency to withstand possible scrutiny from the taxing authorities, you have to make sure that your paperwork matches your residency.

Ask yourself these questions:
• Where do you vote?
• Which state’s driver’s license do you have?
• What address is on your federal income tax return?
• Which address does Social Security have on file?
• Where does most your mail go?
• What address does your life insurance policy have on it?

Take a careful look at those items, and that will tell you what state is your resident state. If you want to make changes, it’s really too late for your 2015 returns, but you can still plan for the future.

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This story was first posted in February 2016.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.