Florida Tax Information

The State of Florida does NOT impose a Personal Income Tax!

The State of Florida also does NOT impose Inheritance or Gift Taxes!

• How is Florida Residency Determined?

• Florida Ad Valorem (Property) Tax

• Florida Estate Tax

• Florida Sales & Use Tax

• Motor Vehicle Taxes

• Florida Corporate Tax

• Florida Unemployment Tax

• Other Florida Taxes

• Florida Tax Links

How is Florida Residency Determined?

You are considered a Florida resident when your true, fixed, and permanent home and principal establishment is in Florida. Filing a declaration of domicile, qualifying for homestead exemption, or registering to vote in Florida can establish residency. Other actions, such as obtaining a Florida driver's license, only indicate an intent to establish residency.

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Florida Ad Valorem (Property) Tax

If you purchase a home in Florida, you will pay ad valorem or "property" tax based on the taxable value of the property. Ad valorem taxes are assessed by the county property appraiser and collected annually by the tax collector's office.

A $25,000 homestead exemption is available to homeowners who meet certain requirements. Certain exemptions are also available to blind persons and other physically-challenged residents. Call your county property appraiser for details or visit www.propertyappraiser.com.

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Florida Estate Tax

Florida’s estate tax system is commonly referred to as a "pick up" tax. Florida picks up all or a portion of the credit for state death taxes allowed by the federal government. Under this system, Florida estate tax is not due unless an estate is required to file a federal estate tax return. The federal filing threshold for years 2006 through 2008 is $2,000,000. When the gross value of an estate is below this threshold, a Florida estate tax return does not need to be filed.

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Florida Sales & Use Tax

Sales Tax - Florida's general sales tax rate is 6 percent. Each retail sale, admission charge, storage, use, or rental is taxable, along with some services. Some items are specifically exempt. Some counties impose a discretionary sales surtax in addition to the 6 percent state tax. The county tax rates can range from .25 to 2.5 percent, and are levied on the first $5,000 of the purchase price. The $5,000 limit does not apply to commercial rentals, transient rentals, or services. Consumers pay sales tax and any county-imposed taxes to the seller at the time of purchase.

Here are some examples of business activities, product uses, and consumptions requiring the collection of sales tax or the payment of use tax:

• Sales of taxable items at retail.

• Repairs or alterations of tangible personal property.

• Rental or lease of real property (for example, commercial office space, mini-warehouses, or short-term living accommodations).

• Rental or lease of personal property (for example, vehicles, machinery, equipment, or other goods).

• Charges for admission to any place of amusement, sport, or recreation.

• Operating private membership clubs that provide recreational or physical fitness facilities.

• Manufacturing or producing goods for sale at retail.

• Importing goods from any state or foreign country, for sale at retail or for use in the business.

• Selling service warranty contracts.

• Ordering and using, on a regular basis, mail-order products on which no sales tax was charged.

• Operating vending or amusement machines.

• Providing taxable services (for example, investigative and crime protection services, interior nonresidential cleaning services, and nonresidential pest control services).

Use Tax - Unless specifically exempt, merchandise purchased out of state is subject to tax when brought into Florida within 6 months of the purchase date. This "use tax," as it is commonly called, is also assessed at the rate of 6 percent. Examples of such taxable purchases include purchases made by mail order or the Internet, furniture delivered from dealers located in another state, and computer equipment delivered by common carrier. Items purchased and used in another state for 6 months or longer are not subject to use tax when the items are later brought into Florida.

No use tax is due if the out-of-state dealer charged sales tax of 6 percent or more. If the dealer charged less than 6 percent, you must pay the difference to equal 6 percent. For example, if the dealer charged 4 percent, you must pay the additional 2 percent to Florida. An Out-of-State Purchase Return must be used to file and pay use tax. If the tax owed is less than $1.00, you do not have to file.

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Motor Vehicle Taxes

Florida's 6 percent use tax applies to and is due on motor vehicles brought into the state within 6 months from the date of purchase. If the purchaser resides in a county that imposes a discretionary sales surtax, that tax also will apply. Use tax and discretionary sales surtax do not apply if a like tax equal to or greater than 6 percent has been lawfully imposed and paid to another state or District of Columbia.

It is presumed that a motor vehicle used in another state, territory of the United States, or District of Columbia for 6 months or longer before being brought into Florida was not purchased for use in Florida. To qualify for exemption from use tax, you must provide documents to prove that the vehicle was used outside Florida for 6 months or longer.

The full amount of use tax (6 percent) applies and is due on any motor vehicle imported from a foreign country into Florida. It does not matter if the motor vehicle was used in another country for a period of 6 months or more prior to the time it is brought into Florida. Furthermore, Florida does not recognize tax paid to another country when calculating the tax due. The tax is calculated on the value of the vehicle at the time it is brought into Florida, not on the original purchase price.

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Corporate Income Tax

Corporations that conduct business, earn or receive income in Florida, including out-of-state corporations, must file a Florida corporate income tax return. The return must be filed, even if no tax is due.

Corporations located in other states that are partners in a partnership or members of a joint venture doing business in Florida must file a Florida Corporate Income/Franchise and Emergency Excise Tax Return. A Florida partnership is required to file a Florida Partnership Information Return if a corporation is one of the partners.

A limited liability company classified as a corporation for Federal tax purposes must file a Florida corporate income tax return. A corporation with ownership in a Florida limited liability company treated as a partnership for Federal income tax purposes is subject to the Florida Income Tax Code and must file a Florida corporate income tax return. A limited liability company that is disregarded for Federal tax purposes is not required to file a separate Florida corporate income tax return. However, the company's income is not exempt from tax. If a limited liability company has a corporate partner, it is required to file a Florida Partnership Information Return.

S Corporations and tax-exempt organizations are generally not required to file a Florida corporate income tax return if they do not have Federal taxable income. If they have Federal taxable income, however, they are then required to file a Florida corporate income tax return and pay any tax due. Tax-exempt organizations must attach a copy of their Federal "determination letter" to Form F-1120 for the first year they qualify as an exempt organization.

Homeowner and condominium associations that file Federal Form 1120H must file a Florida corporate income tax return for the first year in Florida. Only the information questions need to be answered. Florida returns for subsequent years are not required when federal Form 1120H continues to be filed. If Federal Form 1120 is filed, a Florida corporate income tax return is required regardless of whether any tax may be due. A Florida corporate income tax return is also required for the first year federal Form 1120H is filed subsequent to the filing of federal Form 1120.

Tax Base and Rate - Florida corporate income tax liability is computed using Federal taxable income, modified by certain Florida adjustments, to determine adjusted Federal income. A corporation doing business within and without Florida may apportion its total income. Adjusted Federal income is apportioned to Florida using a three-factor formula. The formula is a weighted average, designating 25% each to factors for property and payroll, and 50% to sales. Nonbusiness income allocated to Florida is added to the Florida portion of adjusted Federal income. An exemption of up to $5,000 is subtracted to arrive at Florida net income. Tax is computed by multiplying Florida net income by 5.5%.

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Florida Unemployment Tax

Who pays unemployment tax? - An employer who has employees may have to pay this tax. Workers do not pay any part of the unemployment tax and employers must not make payroll deductions for this purpose. Your payments go into a reserve fund from which benefits are paid to eligible claimants. After a qualifying period, employers with a stable employment history will receive credit for this in a reduced tax rate.

Who is liable? - A new business is required to report its initial employment in the month following the calendar quarter in which employment begins. An "Application to Collect and/or Report Tax in Florida" must be completed to determine if the employer is liable for the tax as provided by law.

An employer may establish liability if it meets any of the following conditions:

• It has a quarterly payroll of $1,500 or more in a calendar year.

• It has one or more employees for a day (or portion of a day) during any 20 weeks in a calendar year.

• It is an agricultural employer and has five or more workers for a day (or portion of a day) during any 20 weeks in a calendar year, or a $10,000 cash payroll in any calendar quarter.

• It is a domestic employer with a cash payroll of $1,000 or more in a calendar quarter.

• It is liable for federal unemployment tax.

• It purchases a liable business (either all or a portion), or if the combination of the employer's payroll or employment and the payroll or employment of the business purchased meets liability criteria.

• It is a nonprofit organization as defined in section 3306(c)(8) of the Federal Unemployment Tax Act and s. 501(c)(3) of the Internal Revenue Code and has four or more employees for a day (or portion of a day) during any 20 weeks in a calendar year.

• It is a state, county, city, or joint governmental unit.

• It is an Indian tribe or tribal unit.

Who are employees? - The following definitions will aid you in understanding who should be considered employees.

• Employment - Any service performed by an employee for the person employing that individual.

• Employee - A person who is subject to the will and control of the employer not only as to what shall be done, but how it shall be done.

• Casual Labor - Work performed that is not in the course of the employer's regular trade or business and which is occasional, incidental, or irregular. Casual labor should not be confused with temporary or part-time employment. A corporation cannot have casual labor, as covered in the Internal Revenue Code of Regulations.

• Independent Contractor - One who is not subject to the will and control of the employer. The employer does not control or direct the manner or method of job performance. The general public knows the independent contractor as such.

• Officers of a Corporation - Any officer of a corporation performing services for the corporation is an employee of the corporation during tenure of office, regardless of whether compensation for such services is received. Compensation, other than dividends upon shares of stock and board of director fees, shall be presumed to be payment for services performed.

• Limited Liability Company (LLC) - A person who is a member of an LLC that is classified as a corporation for federal income tax purposes and who performs services for the LLC is deemed an employee. Effective January 1, 2004, a limited liability company shall be treated as having the same status as it is classified for federal income tax purposes.

• S Corporation - Salaries paid to corporate officers are considered wages. All or part of the distribution of income paid to corporate officers who are active in the business and are performing services for the business can be considered wages.

• Employee Leasing Company - An employee leasing company is an employing unit that maintains a valid and active license under Chapter 468, Florida Statutes.

• Salesperson - Any individual paid solely by commission under your direction and control is an employee. The law provides specific exemption only for insurance agents, real estate agents, and barbers who are paid solely by commission. If they are paid by salary only or salary and commission, both are taxable and exemption does not apply. There is no federal unemployment tax exemption for barbers paid solely by commission.

• Agricultural Labor - Any service performed on a farm in the employ of the owner, tenant, or any other operator of a farm in connection with the production or harvesting of any agricultural or horticultural commodity or in connection with the maintenance or operation of farm equipment or grounds.

Wages - These are all payments for services in employment, including commissions, bonuses, back pay awards, and the cash value of all payments in any medium other than cash. The cash value of meals and lodging will be exempt if it is included as a condition of employment for the convenience of the employer.

Sick and accident disability payments paid by an employing unit to an employee in the six calendar months after the calendar month the employee stopped working are wages. Payments made under a workers' compensation law are not wages. Tips are covered wages if received while performing services that constitute employment and are included in a written statement furnished by the employee to the employer.

Reporting Wages - During the last week of each quarter, a pre-printed Employer's Quarterly Report is mailed to each liable employer. Failure to receive the form does not relieve the employer of the responsibility to file. The tax report must include: total wages paid to covered workers, excess wages, taxable wages, and tax due. The wage report must include each employee's name, social security number, and total wages paid during the period. If an employer is operating two business units and the secondary unit(s) has a cumulative total of at least 10 employees, a Multiple Worksite Report must be submitted.

How much do you pay?  - The tax rate for new employers is .0270 (2.7%). The first $7,000 in wages paid to each employee during a calendar year is taxable. Any amount over the $7,000 is considered excess wages and is not subject to tax. Excess wages can never be greater than gross wages.

When a business is transferred, the successor may count wages paid to an employee by the predecessor when determining the taxable wage figure. The wages of employees who work in another state and are transferred to Florida are counted when calculating taxable wages reportable to Florida.

Employer's tax rate - Only taxable wages that are reported by the end of the quarter immediately preceding the quarter for which the rate is calculated can be used in the tax rate calculation. When a new employer becomes liable for the payment of tax, the tax rate is .0270 and will remain that until the employer has reported for 10 quarters (11 quarters in some cases). The account will then be rated by dividing the total benefits charged to the account (6 quarters) by the taxable payroll reported for the first 7 of the last 9 quarters immediately preceding the quarter for which the rate is effective. The one exception would be those employers liable by succession and who choose to accept the tax rate of the predecessor with the accompanying responsibility of paying any outstanding indebtedness due. At that time, a tax rate will be calculated based on the employment record and the rating factors, which are built into the Unemployment Compensation Law. The maximum tax rate allowed by law is .0540 (5.4%), except for employers participating in the Short Time Compensation Program. Prior to the applicable year, rate notices are mailed to all employers that have a tax rate. An appeal of the tax rate must be made within 20 days from the date of notification (date printed on the rate notice).

Important to Report Timely - Employers have one month after the end of each quarter to file reports and pay tax. To avoid penalty and interest, you must report and pay your tax on time. Unpaid tax may also affect your future tax rate. Reports and payments sent by mail are considered filed and paid as of the postmark date.

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Other Florida Taxes

Florida does NOT impose personal income, inheritance, or gift taxes. However, there are other taxes and fees that, in certain counties or circumstances, Florida residents may be required to pay, such as: convention development tax, local option tourist tax, documentary stamp tax, lead-acid battery fee, new tire fee, motor vehicle fee (Lemon Law), or rental car surcharge.

Some businesses are also subject to other taxes than those listed above. Examples are tangible tax on business assets, communications tax, pollutants tax, and fuel tax.

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