Hey guys,
I sold a stake of my business in Feb of this year and in doing so partnered with a company in Florida. We currently live in Minnesota but have been considering moving to Florida for a few reasons:
1) I will need to travel there more often now that I'm partnering with a company there so it will make this much easier, 2) we'd like to live somewhere warmer, 3) we are in a high tax bracket and so the tax savings would be significant (MN is 9.85% vs FL being 0%).
We were planning to move to Florida next year for the above reasons, and also in anticipation that when we sell the remainder of the company in a few years then we will be residents and save the state income taxes on the sale. Our plan is to keep our MN house and spend 5 months of the year year and 7 months in Florida.
Combined from the partial sale of the business and the distributions from the company our MN state income tax for 2020 will be around $320,000 (250 in cap gains and 70 in regular income). It didn't occur to me until yesterday though that if we lived in Florida for 183+ days of 2020 then we could claim residency for this year (along with doing the other things like getting a FL drivers license, local bank account, buy a house, etc) and save the state income taxes.
Putting aside the fact that in order to pull this off we'd have to relocate within the next 2 weeks, is it possible that if we moved to Florida in 2020 for 183 days and claimed residency that we would be able to avoid paying the $320,000 to MN? Or would we still owe those taxes in MN for 2020 either way? My understanding is that MN would investigate things like this pretty thoroughly and my concern would be that they would argue that as we were residents of MN when the sale occurred that we would still owe those taxes to MN, even if we were FL residents for the majority of 2020.
Many thanks for any advice or input! I'm talking to a tax accountant about this too but wanted the input of the MMM community as well.