Tax+Business Alert: February 16, 2021

TAX+BUSINESS ALERT

News for your business and your life. | Hawkins Ash CPAs

In this Edition

February 16, 2021

Consider Taxes Before Moving Out of State

PODCAST: Identity Theft

What's Your Financial Personality?

E-filing Wisconsin Business Tax Returns

VISIT CPA-HQ

Consider Taxes Before Moving Out of State

With so many people working remotely these days, it’s become common to think about moving to another state — perhaps for better weather or to be closer to family. Many retirees also look at an across-the-border move to better control living expenses. If you’ve found yourself harboring such notions, be sure to consider taxes before packing up your things.

Identify Applicable Taxes

It may seem like a no-brainer to simply move to a state with no personal income tax, but you must consider all taxes that can potentially apply to state residents. In addition to income taxes, these may include property taxes, sales taxes, and estate or inheritance taxes.

If the states you’re considering have an income tax, look at what types of income they tax. Some states, for example, don’t tax wages but do tax interest and dividends. And some states offer tax breaks for pension payments, retirement plan distributions and Social Security payments.

Prepare for Domicile

If you make a permanent move to a new state and want to escape taxes in the state you came from, it’s important to establish legal domicile in the new location. Generally, your domicile is a fixed and permanent home location where you plan to return, even after periods of residing elsewhere.

Each state has its own rules regarding domicile. You don’t want to wind up in a worst-case scenario: Two states could claim you owe state income taxes if you established domicile in the new state but didn’t successfully terminate domicile in the old one. Additionally, if you die without clearly establishing domicile in just one state, both the old and new states may claim that your estate owes income taxes and any state estate tax.

The simplest and most obvious way to establish domicile is to buy or lease a home in the new state and sell your previous home (or rent it out at market rates to an unrelated party). Then change your mailing address on passports, insurance policies and other important documents. Getting a driver’s license in the new state and registering your vehicle there also helps. Be sure to take these and other steps as soon as possible after moving.

Do the Research

When looking into whether the grass is greener in another state, do some research and contact us. We can help you avoid unpleasant tax surprises.

PODCAST

Identity Theft

Whether it be by giving out your private information, breaches of data, or the dark web, there is a lot of information out there that will let scammers get into our personal lives. This episode provides an overview of what the IRS is doing to help prevent identity theft.

Listen Now

What's Your Financial Personality?

We all want to keep our finances on track, but doing so can be difficult without a clearly expressed plan. Everyone’s strategy doesn’t have to be complex, but it does generally need to cover two major facets: paying down debt and saving money.

If you’re like most Americans, you probably have multiple credit cards, as well as perhaps a mortgage and student loan debt. The inevitable question becomes: Which facet should take priority? Should you pay off your debts first, then focus on saving for the short and long term? Or should you create a cash reserve before you tackle debt? Can you do both at the same time? The answer depends on you and your situation.

Often, the best first step in figuring out how to develop a personal financial plan for saving versus paying down debt requires an honest, introspective look at how you deal with money. Everyone has a financial personality that has developed over time based on factors such as how you learned about money as a child, current occupational status and risk tolerance.

Think about what you do when you want something you don’t have the cash to buy. Do you buy it anyway using credit, deny yourself the purchase entirely or wait until you’ve saved up the money? Your approach to spending and saving should point the way to developing a sound strategy that balances controlling debt — or, preferably, eliminating it — and building savings.

Contact: Matt Cantlon, CPA

Phone: 507.252.6672

Email: [email protected]

E-filing Wisconsin Business Tax Returns

Wisconsin Department of Revenue (WDOR) recently posted a reminder of Wisconsin business tax forms that are required to be submitted to the state via electronic filing.

To deter businesses from filing paper forms, the forms available on the WDOR website are overlaid with a watermark. The WDOR also did not provide an address in the instructions on where to send the forms since they need to be filed electronically.

There is a WDOR Approved Vendor List of E-file software products. Businesses are encouraged to read the information on the product websites carefully before choosing a company and beginning the filing process.

Please contact your local Hawkins Ash CPAs office for assistance with filing your Wisconsin business tax returns.

View the List of Tax Forms

More Resources from CPA-HQ

Employee Retention Credit (ERC): Quick Reference Guide

As an employer who may be going through a difficult time, we don’t want you to miss out on any opportunities for funding. We've provided a quick resource guide of the valuable Employee Retention Credit (ERC) that has received major changes and is extended into 2021.

Claiming the Home Office Deduction

Did you find yourself working from home during the COVID-19 pandemic? You might be able to claim the home office deduction on your 2020 tax return.

All Taxpayers Can Get Identity Protection PIN

It's becoming more commonplace for taxpayers to request Identity Protection Personal Identification Numbers (IP PIN). Once an IP PIN is acquired, you cannot electronically file your tax return without this unique code. An IP PIN essentially locks your tax account.

View Guide

Learn More

View Now

Part of your business. Part of your life. | www.HawkinsAshCPAs.com