selling a home and moving to another state and buying another home

[mitch783]

I always use Turbotax and am sure it will walk me through this but ..... 

we sold our home in Maine where we lived for over 3 years after selling another home in Maine that we lived in for 23 years. we are retired and moved to Florida and closed on our home here approximately a week after the sale in Maine. I know we won't owe capital gains but when I file do I need to file the Maine taxes as we lived there all year? There are no state taxes in Florida and I am cautious about taking money out of our IRAs living in FL afraid that Maine will want their 7.5%. 

[rjs]

It's not clear exactly when you moved. Unless you moved on December 31 or January 1 you will have to file a part-year resident return in Maine for the year that you moved. Any income that you received while you were still a resident of Maine will be taxed by Maine. Any gain from the sale of the home in Maine is subject to tax by Maine, no matter when you sold it. (I don't know what Maine's rules are for the gain from selling your home.)

You said you lived in Maine "all year." For whatever year that was, you have to file a regular Maine resident tax return and pay Maine tax on any income that you received in that year.

You do not have to pay Maine tax on any money that you take out of your IRA when you are no longer a Maine resident.

If you have further questions, please give the exact dates that you sold the home in Maine, moved to Florida, and bought the home in Florida. Also clarify which year's tax returns you are asking about.

[mitch783]

sorry .... we closed on our Maine home 08/22/2023 and arrived in FL 08/25/2023 and closed in Florida on our new home 08/28/2023. Planning ahead for our 2024 tax returns. Maine allows a couple a $500k credit on taxable gains for real estate as long as they lived in the home at least 2 years and we were over 3. We are way under that credit amount. 

We did have some taken out of our IRA's while we were in Maine. 

[rjs]

So you have to file a Maine part-year resident tax return for 2023. You could use 8/25 as the date that you moved. Any IRA withdrawals that you took before 8/25 will be taxable on your Maine part-year return.

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@mitch783 wrote:

Planning ahead for our 2024 tax returns.

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The tax returns that you file in 2024 are your 2023 tax returns. You will file your 2024 tax return in 2025. What you did in 2023 does not affect your 2024 tax return. You will not have to file any state tax return for 2024 (unless you have some continuing income from a Maine source that you haven't mentioned).

Note that pension income is treated as being from the state that you live in when you receive it, even if you earned it in another state or it's paid from another state. So if you have a pension from a job in Maine, it is not subject to Maine tax after you moved to Florida.

[mitch783]

i meant the taxes i would be doing in 2024, obviously for the prior year. just didnt state it correctly. 

[Opus 17]

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@mitch783 wrote:

sorry .... we closed on our Maine home 08/22/2023 and arrived in FL 08/25/2023 and closed in Florida on our new home 08/28/2023. Planning ahead for our 2024 tax returns. Maine allows a couple a $500k credit on taxable gains for real estate as long as they lived in the home at least 2 years and we were over 3. We are way under that credit amount. 

We did have some taken out of our IRA's while we were in Maine. 

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You are a part-year resident of Maine and will file a part-year resident return that reports and pays taxes on all your Maine-sourced income.  Maine-sourced income includes all the income you earned or received while living in Maine (including social security, IRA, wages, investment sales, interest and dividends, and so on).  Maine-sourced income also includes income that is "effectively connected" to the state of Maine even if you are not living in state.  In your case, that is probably only the sale of the house, if the house happened to close after the date you made Florida your permanent residence.  (Maine-sourced income could also include rental property you own in Maine, a Maine state lottery prize, and similar items.)  

Maine will not tax IRA withdrawals or other income paid to you after you changed your state of permanent residency unless it is effectively connected to Maine, as described.

In Turbotax, you will indicate you moved away from Maine and indicate the date you left Maine as your permanent residence. (If you moved into a state with an income tax, you would also file a part-year resident return for the state you moved into, but Florida doesn't have state income tax of course.)   Turbotax will need you to allocate all your different sources of income based on where you were living when it was paid.  You need to pay attention to this because the program can't guess for you and your allocation will determine how much tax Maine takes.   For example, you may have a 1099-R from your IRA showing total withdrawals of $30,000.  If $10,000 was while you were living in Maine and the rest after you moved out, you will have to report that in the program.