How to Protect Your Money! (Part 2)

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Nov 28

Written By Eric Gelb

Image sourced by Cytonn Photography @cytonn_photography

Good morning.

Today, we’re returning to our discussion about managing your risks and protecting your money.

Which is actually a core component to building wealth!

In case you missed Part 1 of this blog post series, click here.

If you’ve been following Budget and Grow Rich® for any period of time, you probably have realized that the stories I share Actually Happened, often to me and sometimes to others.

This story, as unbelievable as it may seem, Actually happened.

Let’s get to it!

A taxpayer – let’s call him Ralph – changed his residence from New York State to Florida.

Part of the reason was a change of scenery, warmer weather and to save income taxes.

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No State Income Taxes. . .

Currently, nine states do not levy income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

While zero income taxes is certainly appealing, it’s important to get insight into the tax codes of each state to determine your tax liability (tax burden) and how a state’s tax rules may impact you.

A zero percent state income tax rate does not mean that a particular state does not charge other taxes.

My brother and sister-in-law live in Florida. They moved from New Jersey before COVID 19 and eliminated their state income taxes and did save money on housing. But post-COVID, housing prices and the cost of property and casualty insurance have soared.

It’s important to get a handle on the relevant state taxes and the cost of living as well as get a good sense of what life will be like when you live there Before you relocate so you can plan accordingly.

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States look to collect taxes!

State governments along with other governments look to collect any and all taxes they are legally entitled to collect. Period full stop!

Ralph loved hunting and frequented a hunting lodge located in New York State.

Late last year, Ralph’s New York State Hunting License expired.

He traveled north to New York to renew his license.

In order to save $14, when Ralph filled out the hunting license renewal form, he checked the box that said he was a New York State Resident, Unfortunately.

Not the ‘nonresident’ box.

Then Ralph signed and dated the form.

OOPS!

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In other words, on the New York State hunting license renewal form Ralph declared that he was a New York State resident – and Not a nonresident.

Which means that he would be subject to New York State Income Taxes, which he was trying desperately to escape.

Recently, I renewed my CPA license with the New York State Department of Education and copied the following language from that form:

“I hereby certify that all the statements, attestations, information, and data contained in this application are true, complete and accurate. I understand that any misrepresentation or any false or misleading information made in connection with my application may result in criminal prosecution and may be cause for disciplinary action, including the loss of my license; and that the willful failure to register while continuing to practice my profession constitutes professional misconduct.”

The additional piece of damming evidence was the line where Ralph certified that he represented that ALL the ‘information on the form was true and accurate

The New York State Income Tax Authority decided to conduct a tax audit of Ralph’s tax returns as part of an effort to collect unpaid income taxes from taxpayers that left the state and changed their state of residence.

According to my sources, The New York State Income Tax Audit Department used the hunting license renewal form as a statement, as evidence, that Ralph was a New York State Resident and therefore subject to New York State Income Taxes.

And that meant that Ralph owed New York State a LOT OF MONEY IN INCOME TAXES PLUS INTEREST AND PENALTIES.

So. . .

Before you sign any forms or click any ‘I accept all terms and conditions’ websites, crystallize what you are looking to accomplish.
Gain a thorough understanding of what every word means and the language’s impact on You.
Before you sign or click, read every word, every line and every page every time. And consider the context of the terms and conditions as it relates to you and your circumstances and goals and objectives.
Before you sign or click, never hesitate to ask for professional advice – for example, from an accountant / CPA or financial adviser.

Be sure to read the fine print and think before you sign or click!

See you next week.

Arthur VanDam

P.S. To Save More Money Every Day – click here.

Budget and Grow Rich® – ISSN: 2992-9296 – USA International Standard Serial Number

Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax, accounting or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!