For seniors wrestling with a troubling economy and limited-fixed incomes, IRS tax lawyers suggest one important consideration to maximize your financial resources is to limit, to the extent legally possible, your tax burden by moving to tax friendly states. In this regard, IRS attorneys point to a recent article in the Kiplinger’s Personal Finance magazine which identified tax friendly states and not-so-friendly states.
It may come as no surprise, but IRS tax attorneys say Wyoming topped the list of most tax-friendly states for retirees. IRS attorneys say the State of Wyoming has no state income tax, which in these days of government taxing and spending run amok, is a refreshing change of pace for most retirees.
The Magnolia State, Mississippi came in second on the Kiplinger’s list. IRS tax lawyers report that retirees in Ole Miss can look forward to their Social Security benefits being exempt from state taxes. According to IRS attorneys the state also excludes all qualified retirement income from state taxes, a definite added-plus.
Interestingly, Pennsylvania came in third on the list because it reportedly offers state income-tax exclusions on a wide-variety of retirement income. IRS attorneys caution seniors thinking about Pennsylvania to look further into whether their specific sources of retirement income qualify for exclusion under Pennsylvania’s tax laws.
Coming in a close forth was The Bluegrass State, Kentucky. IRS attorneys report Kentucky exempts Social Security benefits from state income taxes, and that it also excludes up to $41,110.00 per person of a wide-variety of retirement income, including public and private pensions and annuities.
Number five on the Kiplinger list is the Yellowhammer State, Alabama. IRS tax attorneys say that Alabama exempts most retirement income from state income tax. Again, retirees thinking about relocating to Alabama to take advantage of favorable state tax treatment of retirement income should do their homework before backing their bags.
While many IRS attorneys recognize state income tax can be a factor in helping to dwindle away a retiree’s nest egg, these same IRS tax lawyers remind retirees there are other factors to consider. For example, the differences in cost of living in various states can be significant, and those differences may outweigh the favorable tax benefits. Other factors include such things as proximity of family, the weather, and the availability of suitable medical facilities and treatment options to name of few.
They say growing old ain’t for sissies, but it doesn’t mean you shouldn’t do what you can to make your retirement years as enjoyable and tax free as possible. So in the famous words of Star Trek’s Mr. Spok, “live long and prosper.”
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