Saturday, December 4, 2021

When It Comes to Taxes, Being Tracked Can Be a Good Thing

This article is part of our new series, Currents, which examines how rapid advances in technology are transforming our lives.

Two months ago, Jeff Sheu, a private equity executive, moved from San Francisco, where he had lived for close to 20 years, to Summerlin, a Las Vegas suburb. During the stay-at-home period of the pandemic, he realized he no longer needed to be in a city where the property was expensive, taxes were high, and his quality of life, now that he was married with a small child, had changed. And with vaccinations available and business travel resuming, he could live somewhere he liked as long as he could get on a plane for work.

“I love California, but over time the cost of living got exorbitantly high,” said Mr. Sheu. He was born and raised in that state and went to the University of California, Berkeley. “I grew apart from California. Moving out of a city for more space in the suburbs is a pretty common goal. It often marks a maturation point for Americans with young children, who value well-regarded schools over a nightlife scene. But given the state, Mr.

Sheu had left, and the high compensation from his work, he was concerned that his departure would not go smoothly. As the managing director of a private equity firm, he is precisely the type of high earner California does not want to lose. When people in his tax bracket leave, the state is likely to audit them to make sure they really have left.

With the May 17 tax filing deadline approaching, people who have moved to another state or are working more remotely need to be extra vigilant with their tax documents. For Mr. Sheu, that involves an app on his smartphone that uses location services to track him all the time. What he is sacrificing in privacy, he is gaining peace of mind, knowing he will be able to show exactly when and where he was in a particular state, should California’s tax authority come after him. Tax-starved states are none too happy to see big taxpayers leave. Enter the need to track meticulously where you are all the time.

“As part of the move, there’s a checklist of things to do, like changing your voter registration,” Mr. Sheu said from Atlanta (having been in Tampa, Fla., and Philadelphia in the previous 36 hours, when he had been traveling for work). “Then there’s tracking your days. You can use Excel, but it’s just in Excel if I get an inquiry from the tax board. They could argue I fat-fingered something. But I’m never apart from my phone. It feels to me like a pretty undebatable way to track where I am.”

Tax apps like TaxBird — which Mr. Sheu uses — and TaxDay and Monaco were created years ago with a different purpose in mind: to help predominantly affluent retirees avoid a tax burden when they returned to their second home in a high-tax state. But since the pandemic sent people home, and in the process, freeing them from being in an office.

These apps have become relevant for professionals who want to work wherever they want to live. These apps operate on a subscription model and are modestly priced. TaxBird, for example, costs $34.99 a year. After a free 90-day trial, TaxDay charges users $9.99 a month. Monaco is geared more toward high earners and offers more options for its service, charging $99 a month or $999 a year.

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