Types of taxes in the United States
Every U.S. citizen should know about taxes and their types because, in addition to the well-known income tax, there are many other types. This information can be particularly useful if you are choosing a place to live, as each state and city sets its own rates.
Income taxes are paid to the federal government, most state governments, and some local governments. The “taxable income” is money you get as a result of self-employment, as a tip, or from the sale of a property. The amount of income tax depends on the amount of your earnings. Anyone who earns income while living in the United States must pay federal income tax.
There are 10 states where government expenses are covered by other taxes, so there is no income tax. These are states such as Alaska, which exists on oil taxes; Florida, which exists on oil taxes and real estate taxes; Nevada, gambling taxes; South Dakota, cigarette, alcohol, and bank franchise taxes; Texas, oil taxes and real estate taxes; Washington, sales taxes; and Wyoming, natural resources taxes. There are also two states where income tax is not levied on wages but is paid on dividends and securities profits – New Hampshire and Tennessee.
Sales taxes or Taxes on Goods and Services
Sales taxes are paid to state and local authorities. These taxes are levied on the cost of goods and services. They are received by the state and used to pay for work done by state and local authorities (e.g., road construction, police and fire brigade).
In states where sales tax is charged, it is necessary to keep in mind that the price on the tag or the price announced for the service is not final, as it does not take into account the tax that is charged when paying. For example, if the soda price is $1.99, then depending on where you live, you will have to pay $1.99 (if you live in Montana), $2.17 (if you live in New York) or $2.08 (if you live in Hawaii).
Sometimes Americans go to neighboring states for expensive purchases or services if there is low or no sales tax. There are 4 states with no sales tax: Montana, New Hampshire, Delaware, Oregon.
These are taxes on your house and land that you pay to the state and local governments. In most localities, property taxes are used to support local public schools.
Estate taxes and Gift taxes
Estate taxes and gift taxes are paid to the federal government and most state governments if the income received exceeds the limited amount. The estate tax is levied upon the death of the owner and gift tax is levied as the property is transferred from one person to another. Typically, a gift is defined as a property of a certain value or significant amount that is set by the Internal Revenue Service and the state each year.
If we are talking about taxes, we have to mention about the filing of a tax return. In fact, this is a complicated process, and it is better to entrust it to a professional company. Here is a service that will help you with southwest tax https://southwesttaxassociates.com/.