If I move to Florida, will N.J. tax my income?

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Q. I work from my employer’s office in Princeton and almost all of my clients are local. I am planning to move to Florida and continue working for my employer remotely, with occasional face-to-face meetings every few weeks. This would likely result in about 80% of client meetings being done from my Florida home and 20% in the Princeton office. I understand there’s no state income tax in Florida. Will I be subject to New Jersey income tax? How will this work?
— Worker

A. What appears to be a relatively straightforward question is actually somewhat complex.

Keep in mind many states are looking for revenue and will do whatever they can to make sure they get their “fair” share.

This is especially true as we’ve seen ourselves thrown headfirst into the world of telecommuting during the pandemic, said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield.

He said he’s going to assume that you won’t be maintaining a home in New Jersey and you will establish full-time residency in Florida. This means you will have a Florida residence, driver’s license, voter registration, doctors, banking and anything else that proves you live in Florida full-time.

The fact that you will periodically come back to New Jersey to do business is where it can get a little complicated, Gobo said.

As mentioned earlier, many states including, New Jersey, are looking for revenue.

“An example of this is the NFL which has something called the `jock tax’ that is calculated by the number of `duty days’ a player spends in a game function in a particular state,” Gobo said. “These days are then attributed to their gross salary and that percentage is what each state will use to calculate the state tax owed.”

Although your situation is not quite as complex as an NFL player, Gobo said if your W-2 reflects New Jersey wages and not Florida wages, New Jersey will attempt to tax the entire income and it will be up to you to defend your residency and allocation of wages out of New Jersey.

“In your case, you would most likely have to allocate the number of days you were in New Jersey and divide that into the total number of working days,” Gobo said. “Then take that percentage and divide that into your gross salary to determine the taxable income allocated to New Jersey.”

He offered this example: Take 261 working days (365 minus weekends and holidays) minus 21 vacation days (this number can fluctuate) minus five sick days (this number can fluctuate) and you come up with 235 actual working days. Let’s assume you’re in New Jersey five days per month (60 days per year). 60 divided by 235 = 25.55%. You would then allocate 25.5% of your total income to be subject to New Jersey state income tax, Gobo said.

You’d be smart to run the numbers with a tax advisor who can examine your entire situation.

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This story was originally published on May 14, 2021.

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.