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All You Must Know About Tax

All You Must Know About Tax

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All You Must Know About Tax

 


Tax background

tax.laws.com/taxes

 

Taxes are imposed on various items within the United States, as well as items that are brought into the United States. Taxes are also imposed on income, including capital gains and inheritance. The United States government has the full authority to impose taxes. In addition, local governments may also impose their own taxes, such as an additional excise tax on gasoline.

 

Title 19

tax.laws.com/title 19

 

Title 19 of the United States code, grants customs the authority to control the goods that enter the country. They also have the authority to tax items as they enter the country. Taxes may be imposed on the value of the item, as well as the weight, dimensions or type of material.

 

Alternative minimum tax

tax.laws.com/Alternative minimum tax

 

The alternative minimum tax is imposed as a flat percentage. Corporations and individuals may use this tax, rather that filing for individual deductions. The alternative minimum tax simply allows for a flat deduction amount based on the total income or profit, before the tax burden is calculated.

 

Sales tax

tax.laws.com/Sales tax

 

Sales taxes are imposed on items at the time of purchase. Sales taxes are considered a regressive tax, as they are imposed as a flat percentage of the purchase price, placing a higher tax burden on those that make a lesser salary. Some items may be tax exempt, depending on the jurisdiction where the purchase is made.

 

Cost segregation

tax.laws.com/Cost segregation

 

Cost segregation involves the separation of real estate from nonstructural elements, in order to lessen the tax burden on that property. Nonstructural elements such as landscaping and rugs, depreciate at a higher rate than the structure itself. By taking part in cost segregation, the immediate tax burden is lessened on nonstructural elements.

 

Fair Tax

tax.laws.com/Fair Tax

 

The fair tax has been proposed as a replacement for income taxes. The fair tax would be imposed as a flat percentage of the purchase price of goods or services. According to the fair tax theory, the wealthy would spend more, thereby paying more taxes, as a percentage of their salary. However, it is not guaranteed that the wealthy would spend more and they may not have an equal tax burden as a proportion of salary.

 

Estate tax

tax.laws.com/Estate tax

 

 The estate tax is imposed on the value of an estate on the day that the benefactor dies. The amount due to creditors may be subtracted from the value of the estate, as well as gifts left to charity. The estate tax is paid independently of the inheritance tax, which is the responsibility of those that inherit from the estate.

 

 

Gift Tax

tax.laws.com/Gift Tax

 

Gift taxes are imposed on gifts of value between two individuals, when that value exceeds the nontaxable limit. There are some exemptions for the gift tax, including gifts from parents to children, when that gift is valued at less than the allowable limit and when their total lifetime gift falls below the lifetime limit.

 

State Tax

tax.laws.com/State Tax

 

States taxes are imposed on top of federal taxes. In fact, many taxes are imposed on the federal, state and local level, such as the excise tax on gasoline. State taxes can include sales taxes and income taxes, with the rate of taxation varying in each state.

 

 

Death tax

tax.laws.com/Death tax

 

The death tax is also known as the estate tax or the inheritance tax, which can be imposed on the state and federal level. Critics of the tax state that it discourages hard work, savings and financial planning as individuals do not want the money to go towards taxes. Instead, those that save money generally do so for their future, as well as their families’ future. However, the high percentage of these types of taxes makes people less likely to save money or work hard, according to critics.

 

Poll Tax

tax.laws.com/Poll Tax

 

The poll tax was imposed on those that wished to vote in the United States, in the late nineteenth century. Often times, rules were in place which excluded certain individuals from paying the poll tax, such as those that had voted previous to the law or those that had fathers that voted previous to the law. In this way, only nonwhites, including Native Americans, had to pay the poll tax.

 

Hypothecation

tax.laws.com/Hypothecation

 

Is the process in which collateral is left to secure a loan. That collateral is hypothetically under the control of the institution which granted the loan. If the individual that has secured the loan fails to pay the loan in full, the granter of the loan may put a lien on the collateral, including the foreclosure process at which time the bank takes full control of the property.

 

Direct tax vs. Indirect tax

tax.laws.com/direct-tax 

 

Direct taxes are imposed directly on the individual that is being taxed. For example, income taxes are direct taxes. In contrast, indirect taxes are those which go through a third party before reaching the appropriate tax jurisdiction. Sales taxes are an indirect tax, as the retailer collects the taxes and then distributes them to the appropriate tax jurisdiction.

 

 

 Payroll tax

tax.laws.com/Payroll tax

 

Payroll taxes are imposed on the salary of an individual, based on their amount of salary and other factors, such as bonuses. The responsibility for the payroll tax is divided evenly among the employer and the employee.

 

Taxation bills

tax.laws.com/Taxation bills

 

 

 Taxation bills can sometimes come to employers for payroll taxes, based on the amount of total salaries paid to their employees.

  

Carbon Tax

tax.laws.com/Carbon Tax

 

Carbon taxes are applied to energy source which release carbon dioxide into the environment. There are carbon credits which are permits that allow companies to release a ton of carbon dioxide into the environment. These permits are used to encourage companies to find safer forms of energy.

 

Social Security Tax

tax.laws.com/Social Security Tax

 

The social security tax is imposed as a percentage of an individual’s salary, until they reach the maximum threshold. The tax is divided equally between an employee and their employer. The tax funds social security benefits which will be paid to the employee upon retirement or if they should become disabled.

 

Corporation tax

tax.laws.com/Corporation tax

 

The corporation tax may be applied based on the size of a corporation or the number of shares outstanding. The corporation may be taxed on their income or on the profit, which is determined after all allowable deductions have been taken.

 

 

Self-Employment tax

tax.laws.com/Self Employment tax

 

The self-employment tax funds social security and Medicare. Normally, employees and their employer share the tax burden, but self-employed individuals are responsible for the entire tax of around fifteen percent.

 

Flat tax

tax.laws.com/Flat tax 

 

Flat taxes are applied on an item, as a percentage of the price or volume of the item. Flat taxes are paid as the same percentage, regardless of who is purchasing the item, as no other factors are taken into account when the tax is applied.

 

Value Added Tax

 tax.laws.com/ Vat tax

 

The value added tax is imposed at each stage of the production of an item. The tax is calculated on the value added to that item at each stage of production up to the completed product. The consumer pays a higher tax, as the completed product has the most value added.

 

Road tax

tax.laws.com/Road tax

 

The road tax is applied to the purchase of vehicles or when vehicles are registered in a state. Each jurisdiction applies the road tax differently, but the road tax is generally utilized to maintain roads in that tax jurisdiction.

 

Small business taxes

tax.laws.com/Small business taxes

 

Small business taxes are applied to those companies which have fewer than five hundred employees or make less than seven million in profit, depending on the type of business. The small business may also receive tax credits as an incentive to provide new job opportunities.

 

Unemployment tax

tax.laws.com/Unemployment tax

 

The unemployment tax is used to fund benefits for those that become unemployed. The tax may also be used to fund programs which can assist the unemployed in finding suitable work, as well as unemployment counseling services.

 

Fungible

tax.laws.com/ Fungible

 

Fungible refers to goods and commodities that can be traded for the same one. In contrast, liquid assets are those which can be traded for other goods or assets, such as goods for money.

 

 Inheritance tax threshold

tax.laws.com/Inheritance tax threshold

The inheritance tax threshold determines the tax burden on those that inherit property. The threshold may differ in certain circumstances, such as the relationship between the benefactor and the beneficiary.

Regressive tax

tax.laws.com/Regressive tax

Regressive taxes are applied as a percentage for the cost of an item, such as sales taxes. These taxes are regressive as all individuals are taxed the same amount, which is a higher percentage of salary for those with lower incomes.

Luxury tax

tax.laws.com/Luxury tax

The luxury tax is often imposed on items that are not considered a necessity. In addition, the tax may be applied to items that have an increase in price as demand for that item increases.

Fat tax

tax.laws.com/Fat tax

The fat tax is applied to foods and beverages which are known to contribute to obesity, in order to discourage the purchase of those foods.

Tax lien

tax.laws.com/Tax lien

Tax liens are imposed on property when an individual or entity has failed to pay taxes. That lien stays in effect until the taxes are paid and up to date. The tax lien becomes the responsibility of the owner of the home, even when the home is sold.

Progressive tax

tax.laws.com/Progressive tax

Progressive taxes are those which apply to each tax payer equally, as a percentage of their salary. For example, if each tax payer paid a flat percentage of their salary to taxes, such as thirty percent, the tax would be progressive, as long a no deductions were allowed.

Commercial tax

tax.laws.com/Commercial tax

The commercial tax can be applied in a variety of ways. For example, the commercial tax may be applied to goods that are transferred between states. The interstate commerce tax may only apply in certain jurisdictions, just as many other commercial taxes.

 

Contact a tax lawyer for legal advice and assistance.

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