Municipal Bond Forum
Residency and interest
Q
For health reasons, I move in the summer to one state where I have property, and in the fall, I move back to the other state. If you own bonds from one state with state taxes and move to another state that doesn’t have state taxes, what happens to the interest?
A
James A. Klotz responds:
Any state with an income tax will tax the interest on “out-of-state” bonds. Naturally, states without income taxes don’t tax bond interest of any kind. The rules governing dual residency can be complex and will vary from state to state. We recommend consulting your accountant or tax advisor regarding your specific situation.
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