LIVING TAX ADVANTAGED
There are myriad reasons to move to Nevada-Tahoe including fresh air, plenty of sunshine and picture-perfect scenery. But one of the most important reasons is the incredible tax advantages. Lake Tahoe has an invisible border that travels up (north) through the center of the lake. This border divides California and Nevada, representing the state line. Interestingly, the California side has nearly the highest taxes in the US with suffocating restrictions on state and property tax deductions. The Nevada side has one of the lowest
taxes overall in the USA. So…
It poses the great million-dollar question, “why would anyone want to live anywhere else?”
While most of you reading this may already have an accountant or a preferred CPA, he/she may not be specialized in or up-to-date on the latest Nevada Tax code/laws. My friend and personal trusted CPA, Jerry Jones, is just that. He’s an expert when it comes to Nevada Tax Law and can answer any of your tax questions that may not be answered here. Jerry assists my clients who are considering Nevada residency and I highly recommend an initial consultation with him; if you do, the visit is on me. Visit TheTaxPlanningCPA.com to learn more.
TAX ADVANTAGES OF RESIDENCY IN NEVADA
Once you have qualified to have legal residency in the state of Nevada, here are a few of the current tax advantages:
- No personal income tax
- No inheritance tax
- No franchise tax
- No inventory tax
- No corporate income tax
- No gross receipts tax
- No tax on sale or transfer of shares
- No tax on issuance of corporate shares
- Low property taxes
AM I A NEVADA RESIDENT?
Determining residency is subjective, as everyone’s tax profile is different. It’s usually
measured with a number of qualifying scenarios. Essentially, California will attempt to
classify you as a resident if your time spent in Nevada can be considered “temporary or
transitory.”
Below is an example of 29 factors to help determine your residency. It should not be
considered any more than just a guide. It shall not be a factor in determining your individual
case. Your unique tax situation can only be determined by you and your qualified tax
professional.
- Birth, marriage, raising family
- Preparation of tax returns
- Resident state income tax returns filed
- Payment and receipt of income
- Ownership and occupancy of custom-built home
- Holding of licenses for conduct of profession
- Ownership of family corporation
- Ownership and occupancy of vacation home
- Ownership of cemetery lots
- Church attendance
- Church donations
- Church membership and committee participation
- Family doctors and dentist
- Car registration
- Driver’s license of taxpayer
- Driver’s license of taxpayer’s spouse
- Voter registration and actual voting
- Charge accounts
- Predominant banking and financial accounts
- Accountant, lawyer, and professional advisors
- Wills prepared and located
- Majority of time spent in that State
- Education of children
- Country club membership
- Intended state of residence
- Presence of, and visits by, other family members
- Social event attendance
- Professional memberships
Consult your CPA, your tax attorney or Jerry Jones if you are unsure about your tax residency status and would like to find out more.
IN CONCLUSION
The complexity and nuances of California residency law, as discussed above, have
significant consequences for a taxpayer facing a residency audit or for a taxpayer who may
simply have questions regarding his or her residency status. With the FTB actively pursuing
residency audits in hope of reaping substantial revenue for the state, a taxpayer may face
an uphill battle. Vague and ambiguous administrative and judicial tests are available for
guidance; yet, as discussed here, these tests are without a bright-line rule and are subject to
factual debates and interpretation. But with careful due diligence and proper planning, a
taxpayer may successfully navigate this body of Nevada v. California residency law.
* https://www.rowling.com/2017/10/02/residency-status/
* https://www.pillsburylaw.com/images/content/1/2/v2/121792/Revisiting-California-Tax-Residency-After-the-TCJA-JMT-Jan.-201.pdf