Out-of-State Income? Tax Planning Tips for Florida Retirees

Retiring in Florida offers many perks, including a lower cost of living and no state income tax. However, managing your tax situation could be more complex than expected if you receive any income from outside the state, such as a pension or rental income.

Many retirees don’t realize that although Florida doesn’t tax personal income, the IRS and other states still might. Understanding how to plan for this can help you avoid surprises and stay compliant. Our experienced Florida tax-IRS attorney explains what you need to know and offers tax planning tips.

Out-of-State Income Sources That Can Affect Florida Retirees

Moving to the Sunshine State has long been a retirement dream for many people, and Smart Asset reports that over 100,000 older adults move here for that reason each year. Many maintain financial ties to other states, which often generate income.

Florida won’t tax your income, but other states and the Internal Revenue Service (IRS) might. This can happen with any of the following:

• Rental income from property located outside of Florida;
• Pensions or annuities issued by an employer in a different state;
• Capital gains from the sale of out-of-state real estate or investments;
• Business income from partnerships or LLCs operating in other states;
• Freelance or consulting income tied to out-of-state clients;
• State tax refunds from prior years of non-Florida residency.

These income types can trigger state filing obligations and IRS scrutiny, especially if not reported correctly. Some states aggressively pursue taxation of income they view as “sourced” in their jurisdiction, even if you’ve moved.

Florida Tax Planning Tips For Retirees to Avoid Penalties

Tax planning can help Florida retirees avoid unnecessary audits, double taxation, or other penalties. However, as each situation is unique, it’s important to work with a qualified professional who understands multistate tax issues and IRS procedures.

As an experienced Florida tax and IRS attorney, our office generally recommends the following tips:

• Maintain proof of Florida residency (such as a driver’s license, voter registration, or homestead exemption).
• Track and separate income from out-of-state income, using bank records or bookkeeping software.
• File nonresident returns in states where you have source income, if required.
• Review pension withholding policies, as some payers may default to the employer’s state.
• Plan distributions and asset sales strategically, especially if tied to out-of-state investments or property.

The IRS may flag retirees for audit if there are discrepancies between 1099s, W-2s, or K-1s and reported residency status. Planning ahead and keeping good records are your best defense.

Received Income From Other States? Contact Our Experienced Florida Tax-IRS Attorney

Proactive tax planning is essential if you’re a Florida retiree with out-of-state income. At Ronald Cutler, P.A., we help retirees protect their financial legacy and avoid IRS and state tax pitfalls.

As a CPA and former FBI agent investigating tax cases, we have over 50 years of experience in tax law and IRS defense. To successfully navigate potential multistate tax issues, schedule a consultation today with our Florida tax-IRS attorney.

Sources:

smartasset.com/data-studies/where-retirees-move-2024

irs.gov/individuals/international-taxpayers/determining-an-individuals-tax-residency-status