I know some of my questions have been covered in other threads, but I’m going to go ahead and create a new thread to cover questions specific to my situation.
Background. My father passed away in late 2022 and I inherited roughly $200,000. I also recently settled the finances in my divorce and received a roughly $300,000 settlement, paid for solely in Alphabet (Google) stock. I also kept the house, which has roughly $900,000 in equity.
Here are my questions… for now.
I’m not comfortable having so much money invested in a single company. The stock inherited the status from when it was in my ex’s account, so it all qualifies as a long term investment. So, I’ll pay the same amount in taxes if I liquidate it all now, or liquidate it in small batches over the next few years, right? So, what should I do? Should I sell now, hold, or something in between?
I have 1 son with my ex who is 8 years old. He and his mom live out of state. The parenting plan isn’t finalized yet, but it’s very likely I will have at least half of my parenting time in Tucson, where he lives. I think the best option is to buy a house in Tucson for us to stay in during my parenting time, and do short term rentals the rest of the time. I am full time remote and I can set up a mobile work station while he’s in school. So my question is… what is the maximum time I can work physically in Arizona before I’m considered an AZ state resident and have to pay AZ state taxes?
What state would you split your time in?
AZ state tax seems kinda of nice (2.5%)
But generally it’s over half the year
I’m in WA which has no state income tax. I will likely be in AZ for 6-8 weeks a year, much less than 6 months.
When I was working, if I was physically in a different state, it was recorded as income earned in that state and taxed as such.
1 Like
https://azdor.gov/sites/default/files/2023-03/PROCEDURES_INDIV_1992_itp92-1.pdf
Looks like you might have up to just under 9 months in AZ. Make sure not to sell your old house, register a vehicle, or use your AZ address for any documents, register to vote, change your license, or have any bank accounts there, if you want to keep it clear where your domicile is and stay as a nonresident.
If you do sell your old house or do any of those other stuff then the question is a little iffy, you may become a part-year resident. You would owe state income tax on income earned while there, not sure about income earned while out of state. Depends how well you can prove that you are a resident of another state too.
1 Like
Teh AI says anything over 60 days. Which is… um… carry the 1… 12 working weeks. Which should be doable, and I can always strategically use my PTO days to keep me under 60 days. I most definitely plan on my home base being in WA and keeping everything registered there
not sure where AI is hallucinating this from but fine
Another consideration, my entire company is full time remote and has a pay scale dependent on where you live. AZ has a lower COL than WA, so I could potential walk myself into a pay cut.
Ok, the document you linked to says it’s not based on any single factor, but “Generally, no one
single factor is controlling,”
I do intend on buying a cheap-ish car to use while I’m in Tucson and I would obviously have to register it there.
Also, in the current political environment, employing staff to audit tax returns has been devalued.
It does have a 9 month limit that’s maybe not absolute but sounds like it’s mostly a hard limit.
But if you are registering the car and buying a house with no other permanent house it makes sense to limit yourself to much less because working there 8 months with a car there and a house there doesn’t sound like a nonresident
I’ll answer the easy part first. 2025 capital gains tax rate: 15% Rate: For single filers with taxable income between $44,626 and $492,300. As long as you keep your taxable income under that mark you get the preferred rate. Do it all at once or spread it out.
Not sure what other investments you have, but I agree with your sentiment that it may not be wise to keep too many eggs in one basket. A diverse portfolio is your friend.
I’m not knowledgeable on the particulars of state residency for tax purposes, but seems like you have your 2 goals properly prioritized:
- making sure you don’t work over the #days that might force a work pay cut
- making sure you don’t work over the #days that make you an AZ resident for tax purposes.
Sounds like you could be shuttling back and forth for 10 years, so I understand the thought on buying a property. As always, unless you know the area you should take some time deciding what you might want. Can’t hurt to do some STR yourself while you look around.
I don’t think working time is going to be the factor there . . . is going to be based on if you own property there and how much of the year you actually reside there.
I agree with OT in that the best starting approach is to assume that any wages earned while working in AZ should be treated as if you would owe AZ income tax; regardless of the amount of time you spend there. CA is definitely this way, but CO isn’t. You can look at their tax documents (or pay an tax attorney to do so) and it’ll generally spell out who is required to pay taxes.
I currently spend about 8 weeks/year working in CO to help with my aging parents and mother-in-law; and I don’t file CO income taxes (since my employer doesn’t withhold for it; where they would if I was working in CA). I think it would be different if I owned property with a dwelling in CO, though.
1 Like
agreed other than that the capital gains 15% tax brackets i saw were slightly different -
48.35K to 533.4K
I can confirm that I make less than 500k a year
My plan is to have primary residence in WA and an investment property in AZ. However, I will stay and work at the AZ property for 6-10 weeks a year.
1 Like
An Arizona full-year resident is subject to tax on all income, including earnings from another state. Arizona will also tax retirement from another state. Residents are taxed on the same income they report for federal income tax purposes, subject only to the specific modifications allowed under state law.
Part-year residents are also subject to Arizona tax on any income earned while an Arizona resident, including retirement from another state, and any income earned from an Arizona source before moving to (or after leaving) the state. Part-year residents should exclude income Arizona law does not tax.
Nonresidents are subject to Arizona tax on any income earned from Arizona sources. Nonresidents may also exclude income Arizona law does not tax.
Individuals subject to tax by both Arizona and another state on the same income may also be eligible for a tax credit. Please see Arizona Credit Form 309 for more information.
https://azdor.gov/individuals#:~:text=Nonresidents%20are%20subject%20to%20Arizona,eligible%20for%20a%20tax%20credit.
1 Like
I think that’s the married filing jointly band
I mean it sounds like the 6-10 weeks I plan on being in AZ won’t meet the threshold for paying AZ state taxes
1 Like
