The climate is only one of many reasons why retirees should consider moving to Florida. The Sunshine State gives individuals many retirement planning advantages not found in other parts of the nation.
Persons that are living part time in Florida should make that state their fulltime residence. The many advantages to retirement planning are only available to full time residents who do their retirement planning through institutions based in Florida. Retirees can save money and enjoy more legal protection by becoming fulltime denizens.
No Income Tax in the Sunshine State
The biggest advantage to setting up legal residence in the Florida is that the state has no personal income tax. This means that the only personal income tax Florida residents have to pay is the federal one.
Florida residents will not have to pay state income tax on money in retirement accounts in Florida. Unfortunately Florida residents could have to pay income taxes on assets in other states. This could include money in retirement accounts in states with income tax and money earned from rental properties in other states.
Florida charges income taxes on businesses and business income. For more information on Florida's business taxes check with the Florida Department of Revenue.
Florida Property Taxes
Property taxes in Florida are determined by local governments and collected by the county. To determine what the property tax is a person will have to contact his or her county property appraiser. A List of County Property Appraisers is available from the Florida Department of Revenue.
Florida Sales Tax
Florida has a General Sales Tax of 6% that covers most business transactions. The majority of retail purchases are covered but there is no sales tax on most groceries in Florida. Household goods such as cleaning supplies would be covered by the sales tax though. Prescription drugs and medical services are not taxed in the state of Florida.
Florida counties have the right to collect a county or Discretionary Sales Surtax in additional to the general sales tax. This tax varies by counties, so it can increase or decrease depending on location. Some transactions of more than $5,000 could be exempt from the discretionary sales tax.
Florida residents should always check to see if sales tax is due and has been paid when they make a purchase. In some cases the purchaser could be required to pay a 6% Use Tax in lieu of the sales tax.
Protection of Assets from Debt Collectors and Lawsuits
Assets held in most retirement planning vehicles are exempt from debt collection efforts and lawsuits in Florida. This means that a debt collector cannot garnish or seize funds held in an IRA or similar retirement account. This protection extends to money in annuities and the cash value of insurance policies. Even funds invested in stocks and bonds through retirement accounts can qualify for this protection.
To get this protection the retirement planning mechanism must be set up through a planner or institution in Florida. An IRA or annuity set up in another state could still be subject to garnishment and other debt collection efforts.
There are some other limitations to this protection. It is only available to legal residents of Florida. Residents of other states that live in Florida are not subject to protection from creditors. Nor would this provision protect Florida residents from the IRS's efforts to collect federal income taxes or lawsuits filed in federal courts.
The protection from creditors only extends to the beneficiaries of retirement accounts, insurance policies, and annuities. If the beneficiary dies, his or her estate can be subject to garnishment and other debt collection efforts.
Another benefit to living in Florida is that it is illegal to initiate liens or other legal debt collection efforts against a person's home in that state. That means homes cannot be seized for payment of debts other than mortgages in Florida.
No state seems to give retirees' assets more legal protection than Florida. In addition to having no personal tax to pay, legal residents of Florida do not have to worry about losing retirement assets to debt collectors.
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