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I've been trying to get myself to settle down and start running some numbers to decide how much I might save by establishing domicile in Florida compared to staying here in New Jersey. Frankly, the process is daunting. And then I thought, "Jeff, there's got to be someone out there in the full-time RVing world who loves this kind of stuff and has already put together a worksheet to simplify this process!"

 

Is there?

 

Complicating things is the fact that when I retire next July I'll be 60, thus needing medical insurance for myself, my wife (she'll be 62), and our college-age children. And I'm not sure what my taxable income will be since we will be selling stocks to pay our bills.

 

Any suggestions?

 

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There are several cost of living calculators on the internet.

 

Here is one comparing Dunellen, NJ and Tampa, FL: http://www.bestplaces.net/cost-of-living/dunellen-nj/tampa-fl/50000

Not knowing where in Florida I guesstimated with Tampa, FL. In some states it can make a difference by county.

 

Here is a state by state tax comparison: https://www.retirementliving.com/taxes-by-state

I put New Jersey and Florida below.

 

 

According to the cost of living website above Tampa is 25% cheaper than Dunellen. Though money can be a very important factor, family ties and your ability to adapt to a very different climate and culture is something to consider also.

 

NEW JERSEY Sales Taxes

State Sales Tax: 7% (food, prescription drugs and non-prescription drugs, clothing, footwear exempt). Local sales taxes are imposed on sales of certain items sold in Atlantic City and Cape May County.
Gasoline Tax: 32.9 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 41.9 cents/gallon (Includes all taxes)
Cigarette Tax: $2.70/pack of 20

Personal Income Taxes (Click here)

(Brackets, deductions, exemptions, and tax rate range)

Tax Rate Range: Low – 1.4%; High – 8.97%.
Income Brackets: * Lowest – $20,000; Highest – $500,000
Number of Brackets: 6
Personal Exemptions: Single – $1,000; Married – $2,000; Dependents – $1,500
Additional Exemptions: Taxpayer or spouse 65 or older – $1,000
Standard Deduction: None
Medical/Dental Deduction: Limited to excess of 2% of gross income
Federal Income Tax Deduction: None
Retirement Income Taxes: Pensions, annuities, and certain IRA withdrawals are taxable and must be reported on your New Jersey resident income tax return. However, the taxable amount you show on your state return may differ from the amount that is taxable for Federal income tax purposes. This is because you may have to calculate the taxable amount for your New Jersey return differently than you do for your Federal return. Social Security and Railroad Retirement benefits, and benefits received as a result of permanent and total disability before age 65, are not taxable and should not be reported as pension income. However, if you retired before age 65 on a total and permanent disability pension, and you continue to receive pension payments after age 65, your disability pension is treated as ordinary pension income beginning the year you reach age 65.

For residents receiving a United States military pension or survivor’s benefit payments, the military pension or survivor’s benefit is not taxable for New Jersey gross income tax purposes, regardless of your age or disability status. Military pensions are those resulting from service in the Army, Navy, Air Force, Marine Corps, or Coast Guard. This exemption does not apply to civil service pensions or annuities, even if the pension or annuity is based on credit for military service. Most military pensions and survivor’s benefit payments are received from the US Defense Finance and Accounting Service while a civil service annuity is received through the US Office of Personnel Management.

The state provides several income exclusions to enable residents to reduce their taxable income. These exclusions can be used every year you qualify. Persons 62 or older may use the Pension Exclusion to exclude all or part of their taxable pensions, annuities, and IRA withdrawals provided their gross income for the entire year before subtracting any pension does not exceed $100,000. The maximum amount excluded depends on your filing status. If married and filing a joint return, you may exclude up to $20,000. If you file as single, head of household, or qualifying widow or widower, you may exclude up to $15,000. If you are married, filing a separate return, you may exclude up to $10,000. If you file a joint return, and both you and your spouse qualify for the Pension Exclusion, you may apply the exclusion to the total taxable pension amount on your return. However, if only one spouse is age 62 or older or disabled, then only the income of the spouse who is age 62 or older or disabled may be excluded.

For more information on taxes due, exclusions, deductions, and exemptions, check out the tax form. Also check out all of the income tax deductions.

Military Personnel Income Tax Information – (click here)

Retired Military Pay: Military pensions are exempt from taxes.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Property Taxes

Property taxation is local. To review property tax brochures, click here.

Property Tax Relief Programs (click here)
New Jersey residents who owned and occupied a home in New Jersey that was their principal residence on October 1, 2011, may be eligible for a homestead benefit provided the 2011 property taxes were paid and they meet certain income limits. The homestead benefit application for homeowners is not included in the NJ-1040 booklet. Information about the 2011 homestead benefit will be posted on the state site as it becomes available.

Tax Treatment of New Jersey Property Tax Benefit Payments(click here)
To calculate the correct amount of property taxes paid on their New Jersey principal residence homeowners must know whether they received a homestead benefit during 2011, the amount of the benefit, and whether the benefit was paid as a credit on their 2011 property tax bill or in the form of a check. For tenants, 18% of the rent paid during the year is considered property taxes paid. Qualified residents should review the instructions in the NJ 1040 booklet for determining the amount of property taxes due and paid for 2011.

The Homestead Rebate Program establishes a system of homestead credits for homeowners and residential tenants. This program previously included residential tenants. The credit program provides taxpayers with benefits calculated as a percentage of the property tax (up to a maximum of $10,000 tax) that they paid during the previous year. The percentages used to calculate this benefit are based on income levels, with higher percentage benefits allowed for the lower income levels, and with no benefit allowed for those whose income exceeds $250,000. The act also imposes a 4% property tax levy cap on school districts and county and local governments, subject to limited exceptions and adjustments. The tax levy cap provisions will apply to budget years beginning on or after July 1, 2007, but not to years beginning after June 30, 2012. The homestead credit provisions will begin to apply to claims for rebates and credits for property tax paid for the year 2006. For more information, click here.

The Property Tax Reimbursement Program reimburses eligible senior citizens and disabled persons for property tax increases. The amount of the reimbursement is the difference between the amount of property taxes that were due and paid in the “base year” (the first year that you met all the eligibility requirements) and the amount due and paid in the current year for which you are claiming the reimbursement, provided the amount paid in the current year was greater. You must meet all the eligibility requirements for the base year and for each succeeding year, up to and including the current year to qualify for the reimbursement.

A Property Tax Deduction/Credit is available to eligible homeowners and tenants who pay property taxes, either directly or through rent, on their principal residence in New Jersey. They are eligible for either a deduction or a refundable credit on their New Jersey resident income tax return. Homeowners and tenants may be eligible for a deduction or credit even if they are not eligible for a homestead rebate. Qualified residents may deduct 100% of their property taxes due and paid or $10,000, whichever is less. For tenants, 18% of rent paid during the year is considered property taxes paid. The minimum benefit is a refundable credit of $50. Those eligible must be 65 years of age or older or blind or disabled and are not required to file a return because their income is below the minimum filing threshold. For more information, click here.

For senior citizens and disabled persons there is a $250 tax deduction from real property taxes provided for a dwelling of a qualified senior citizen. You must be age 65 or older, or a permanently and totally disabled individual, or the unmarried surviving spouse, age 55 or more, of such person. This benefit is administered by the local municipality.

Inheritance and Estate Taxes

New Jersey imposes a transfer inheritance tax, at graduated rates ranging from 11% to 16%, on the transfer of real and personal property having a total value of $500 or more which passes from a decedent to a beneficiary. If a decedent’s death occurs on or after July 1, 1988, property passing to a decedent’s surviving spouse, surviving parents, grandparents, children, stepchildren or grandchildren is entirely exempt from the tax.

In addition to the inheritance tax, New Jersey imposes a separate estate tax. An estate may be subject to the New Jersey Estate Tax even though there is no New Jersey Inheritance Tax payable. For decedents with a date of death prior to January 1, 2002 the New Jersey Estate Tax was designed to absorb the maximum credit for state inheritance, estate, succession or legacy taxes allowable in the Federal estate tax proceeding. It did not increase the estate’s total estate tax obligation. For decedents with a date of death on or after January 1, 2002 the New Jersey Estate Tax was decoupled from the Federal estate tax proceeding.

The New Jersey Estate tax is based upon the Federal Estate tax credit for state death taxes which was allowable under the provisions of the Internal Revenue Code in effect on December 31, 2001. The Federal Estate Tax does not have a provision providing a deduction for property passing to a domestic partner.

Information pertaining to the estate and inheritance tax may be obtained by calling 609-292-5033 or 609-292-5035. You can also click here.

For further information, visit the New Jersey Department of Taxation site.

 

FLORIDA Sales Taxes

State Sales Tax: 6% (food, prescription and non-prescription drugs exempt). There are additional county sales taxes which could make the combined rate as high as 9.5%.
Gasoline Tax: 54.98 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 58.17 cents/gallon (Includes all taxes)
Cigarette Tax: $1.34/pack of 20

Personal Income Taxes

No state income tax
Retirement Income: Not taxed.

Property Taxes

All property is taxable at 100% of its just valuation. Every person who owns and resides on real property in Florida on January 1 and makes the property their permanent residence is eligible to receive a homestead exemption up to $50,000. The first $25,000 applies to all property taxes, including school district taxes. The additional exemption up to $25,000, applies to the assessed value between $50,000 and $75,000 and only to nonschool taxes. If one spouse holds the title, the other spouse may file for the exemption with the consent of the titleholder.

Below is a general list of exemptions available in the state.

The homestead exemption for all residents applies to all property taxes, not just city and county taxes. Annual increases in the assessment of homestead property are limited to 3% of the prior year’s assessed value, or if lower, the percentage change in the Consumer Price Index for the prior year, as long as there was no change in ownership.

For more details on property taxes, click here, then find the link for the county property appraiser for the county in question. For more information on Florida property tax exemptions, click here.

Inheritance and Estate Taxes

There is no inheritance tax and only a limited estate tax.

To review information for new residents, click here.

For general information on Florida taxes, visit the Florida Department of Revenue site or call 800-352-3671.

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There is no cost of living calculator that I know of which is even close to accurate for a fulltimer as the all figure in things like sales taxes which you don't pay in the domicile state but rather in the place that you physically are. But it is safe to say that whatever you pay in income taxes will be a savings, since FL don't have one. And you also will no longer pay property taxes, which are in those cost of living calculators, as well as buying your groceries in the state compared and so on. Unless you plan to spend most of your time in FL, the cost estimates I've seen will be of very little use. To compare insurance for both vehicles and for health you really need to talk to an agent who can sell it since no two people will be very close to the same.

 

Before you consider staying with NJ, do they allow you to use a mail forwarding service to register & insure your vehicles and keep your driver's license? Very few states do so.

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In addition to the info provided, if you use Turbo Tax or other tax software, do some pretend 'What if's!' for the states your considering.

 

Get some quotes for insurance(s) from each state too...

 

Great comment about the ties to families and friends, they can be worth several thousand dollars a year. Or I suppose, be another incentive to move out of Dodge:)!) It all depends on the family and friends...

 

Best,

Smitty

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Complicating things is the fact that when I retire next July I'll be 60, thus needing medical insurance for myself, my wife (she'll be 62), and our college-age children. And I'm not sure what my taxable income will be since we will be selling stocks to pay our bills.

 

Use www.healthsherpa.com to calculate health insurance costs for your NJ and a possible FL ZIP code. Then increase it by 10% for the likely 2017 cost.

 

Both NJ and FL have BCBS EPO plans. The FL EPOs appear to have nationwide coverage, but check to make sure NJ does too. Without nationwide coverage, you may have to limit your travel.

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...Complicating things is the fact that when I retire next July I'll be 60, thus needing medical insurance for myself, my wife (she'll be 62), and our college-age children...

If your children are attending college in New Jersey, you need to consider the impact (if any) of your change of domicile if they are paying a reduced tuition based on instate residency. According to this chart non-resident tuition for the main campus is over 2x that for residents.

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" there's got to be someone out there in the full-time RVing world who loves this kind of stuff and has already put together a worksheet to simplify this process! "

 

No there is no spreadsheet that I've seen. the criteria and specifics are different for everyone. the state specific list is pretty short, income taxes, estate taxes, vehicle taxes & fees, insurance costs. assuming you're going to be a typical traveling fulltimer with no fixed property, all the other costs have nothing to do with your choice of domicile state.

although the financial differences are one part of the decision, just as important is simplifying all the stuff that distracts you from enjoying your new life on the road. Fl, SD & TX are the most popular fulltimer states because they make it easy to establish domicile using a mail forwarding address and support the concept of residency by fulltime travelers, The fact they are also some of the lowest cost states is secondary in my opinion.

 

But from my perspective, NJ vs FL is a very easy decision not requiring a spreadsheet. Especially for someone with assets they intend to pass on to their children, the NJ estate & inheritance taxes are in the top 3 worst in the country. Whether you're going to save a few hundred dollars a year on insurance & registration pales in comparison. Make whatever assumption you think is reasonable for annual taxable income, 0% vs 9% of X is an easy comparison. Medical insurance costs are easy to estimate using online quoting sites.

 

 

" Any suggestions? "

 

Looking at it from the other side, assuming you do make the choice to "move" to Fl, be very careful to make a clean break from NJ. The state of NJ has a well known record in legal circles of aggressively going after some of those who tried to leave the state, for taxes. They are one of the worst at using the legal standard that your previous domicile remains in effect and does not change until you make clear, complete & convincing steps to establish a new domicile. I've seen case records where they used the claim that if you if you were a previous resident & now had no permanent fixed residence in any state, then visiting NJ for as few as 30 days a year made you a NJ resident for tax purposes.

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Looking at it from the other side, assuming you do make the choice to "move" to Fl, be very careful to make a clean break from NJ. The state of NJ has a well known record in legal circles of aggressively going after some of those who tried to leave the state, for taxes. They are one of the worst at using the legal standard that your previous domicile remains in effect and does not change until you make clear, complete & convincing steps to establish a new domicile. I've seen case records where they used the claim that if you if you were a previous resident & now had no permanent fixed residence in any state, then visiting NJ for as few as 30 days a year made you a NJ resident for tax purposes.

 

 

 

Good point. And the fact is that we will be keeping a vacation home in New Jersey that we do NOT intend to return to permanently. From what I read we will have to keep a running count of how many days a year we spend in NJ. Still, we will have to keep paying property tax until we find someplace just as nice but in a cheaper state! ($6K or so a year for a 650 sq ft house. Yipes!)

 

The kids are not going to NJ state colleges, so that's not an issue.

 

HealthSherpa looks very useful. I tried navigating healthcare.gov and nearly lost my mind!

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I picked South Dakota for my State of residence. SD is very helpful and used to residents who travel. Some of the advantages include no vehicle inspections. I did all of the renewals by mail. No income tax. Reasonable, low cost vehicle registration. My wife and I had United Healthcare Medicare supplemental insurance. The cost in NY was $6k per year and in SD it was $4k. My RV insurance also dropped but I forget the amount. I believe the savings was just a couple hundred dollars a year.

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I picked South Dakota for my State of residence. SD is very helpful and used to residents who travel. Some of the advantages include no vehicle inspections. I did all of the renewals by mail. No income tax. Reasonable, low cost vehicle registration. My wife and I had United Healthcare Medicare supplemental insurance. The cost in NY was $6k per year and in SD it was $4k. My RV insurance also dropped but I forget the amount. I believe the savings was just a couple hundred dollars a year.

 

OP will not be on Medicare. He'll have to purchase his own health insurance, probably through the ACA.

 

If that's the case, then SD and TX would be awful states to reside in -- there are no PPO plans with nationwide networks (like BCBS) in either state.

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Born and raised in NJ and I would believe that you will be better off in Florida.

With your ages, medical insurance will be an issue no matter were you live. I good policy will

cost an arm and a leg unless you are willing to go with a very high deductible. Also Florida has very

tough summer weather and I would not be there in the summer. I am also not in SE Texas in the summer.

Good Luck

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