Posted by Christina Traurig on October 10, 2018
Anyone who has ever moved all their possessions from one location to another will tell you that it is not an enjoyable experience -- and moving across state lines just adds to the frustration. The more prepared you are once you’ve made your decision to move to another state, the smoother your transition will be. Below are a few financial items to consider when planning for your move.
The first and most crucial task will be updating your budget. Are you moving to a state with a higher or lower cost of living? What are the state and local income taxes? What about the sales tax rate? You’ll want to make sure that you have a good estimate of what your monthly expenses are going to be to ensure that you can live comfortably. There are plenty of websites that can help you compare the cost of living where you are vs. where you are moving. It can be helpful to have an extra cushion in your emergency savings account while you get used to your new expenses, or in case something comes up that you didn’t plan for.
You should look at your property insurance coverage. For the move, you will want to consider obtaining a moving insurance policy. Once you get to your new home, you’ll want to make sure you have the appropriate homeowners or renter’s insurance policy in place. Auto insurance rates can vary greatly depending on where you live as well. You should contact your insurance agent before the move to get estimates.
Review your estate plan. States have different legal requirements and you’ll want to make sure your documents are all in compliance. The best way to do this is to contact an attorney in your new state to review and update your documents.
At the next tax filing season, remember that you may have to file two state tax returns. As a part-year resident of both states during the year, you must pay tax on the income you earned in each state (unless one of the states does not collect income taxes).