Are You Going To Retire? Relocate To Florida or Alaska To Steer Clear of Additional Taxes

Retirement is often the time for relaxation, leaving worries behind and doing all of the things you wish to do. Unfortunately for many people, it's also the time for thriving on a fixed income, and any income you make is generally a little less than what you warned while working full time in your job. So each retiree is attempting to pay the IRS as little as they possibly can. A few assess their tax returns with a microscope and search for every deduction they can legally claim. Moving elsewhere is what others opt to do. But you don't need to relocate to a foreign country, only a different state. They can find one of the 9 tax-friendly states that don't collect income taxes. And if they really wish to leave IRS problems behind and avoid more taxes, there are no sales taxes in 5 states.

Both criteria include Alaska. And if you can hurdle the climate change, moving to Alaska is the perfect choice. However, this could cause IRS issues because it's not as tax-free as it may seem at first glance.

Though the state doesn't collect sales tax, a few of its boroughs actually collect property taxes. Only your first $150,000 will be exempted if you're at least 65 years old. Moreover, Alaska also charges an estate tax, which is one thing you must know if you are concerned about the inheritance that you'll be leaving your children.

Of course, because retirement is beyond taxes and money, choosing a place to live simply because of their local tax law may cause you to commit a significant mistake that could have easily been avoided. However, income and real estate taxes are what most people are concerned about. The issue with these 2 types of taxes is that when you retire, they basically work in an opposite fashion. While your income reduces, your real estate taxes typically increase. So while you'll be getting less money, you will be required to pay more taxes on your home and property. If you're doing home renovations, you will have to find out how that will increase your property taxes. This could cause IRS issues for retirees living on a fixed income.

Of course, many people choose to live in a small apartment rather than fret about the upkeep of a big house. Picking this option means that they won't be asked to pay any property taxes, but if they are getting a substantial income from pensions and other sources, they may end up needing to pay considerably higher income tax rates. This is primarily determined by where your money comes from and not where you choose to live, regardless if it is Alaska or Florida.

States like New Hampshire, Alaska, Tennessee, Florida, Wyoming, Nevada, South Dakota, Washington, and Texas don't charge income tax. But income earned from stocks or bonds are charged with taxes in states such as New Hampshire and Tennessee. These are two income sources that most retired people receive funds from once they leave their regular jobs.

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