Beware Of Disability Income Tax Traps
The practical takeaway from this discussion is that if you have the prospect of receiving disability income, be sure to consider the tax effects of the different choices you make. A few extra dollars from SSDI might end up putting you in a net negative situation. The tax rules here kind of scream for simplification, but I have not seen any reform proposals being floated sticking you with Reilly’s First Law of Tax Planning. It is what it is. Deal with it.
Address On Federal Return Creates State Income Tax Problem
You are always a resident of the state where you are domiciled even if you spend no time at all there in a given year. I constructed a hypothetical fellow called Harry Hedgefund. He is a dealmeister with offices in Manhattan and Boston. He has apartments in Greenwich Village and the South End, where his mistresses live. And he has a monstrous house in Alpine, NJ where his family lives. That means he is domiciled in New Jersey, but there are many days where he is in New York in the morning and Massachusetts in the evening making him a statutory resident of both states.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.