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United States Taxes
In addition to major income taxes, there are several other types of taxes of which everyone in the
United States should be aware.
Income Tax
The federal government of the U.S. collects tax on your income. Additionally,
most states and some local government have their own income taxes.
Complete Details
Sales Tax
In many states, whenever you buy most items, you will be
charged a sales tax. Sales tax percentages vary among different states and a few states
have no sales tax. States with no state income tax have much higher sales tax.
Merchants are responsible for collecting sales tax and depositing it with the state authority. Not all products in all states are subject to sales tax. In some states, there is no sales tax on food and clothing. Restaurant food may be taxed though. If you pay in cash to a street merchant, you may not be charged sales tax. The U.S. has no concept of VAT (Value Added Tax).
Property Tax
If you live in an apartment, you
don't have to worry about property or real estate tax. The states with no
state income tax have very high property tax rates. Tax rates may vary
based on city, town, or county. You will be charged property taxes based
on the assessed value of your property. The value will be assessed by the tax authority itself and may not
be the same as the market value of the property and may be lower or higher based on the real estate
market.
Property taxes essentially help pay for public schools, community colleges, and other local government matters.
Estate Tax, Gift Tax
Your estate is the property you leave behind when you die. If you leave behind more property than
the standard limit, or want to give away property when you are
alive, your heirs will have to pay heavy taxes for this, sometimes as much as 50% or
more in order to receive that property. These are called estate taxes and gift taxes.
If you are wealthy and expect to leave behind over $2 million in assets for a single person (over $4 million in assets for married couples), you need to consult an attorney for estate planning and to have your will drafted appropriately. Actual amounts that are not subject to estate taxes change over time. Of course, no one plans to die, but if you die unexpectedly, you want your property taken care of and would probably prefer that your county clerk didn't handle it. An attorney will help you find ways to minimize estate taxes. Life insurance is a common means to help you avoid or minimize estate taxes. You need money to pay estate taxes only when you die. Life insurance pays money only when you die. Therefore, that combination works out well for most people.
Hotel Tax
Most hotels
charge tax on top of their regular room rate. Some hotels also charge a luxury tax, occupancy tax, and city
tax. These taxes may sometimes add up to as much as 25% of the total bill. Therefore, when you make
reservations, you should try figure out the final rate after taxes have been added.
Sin Tax
Items like cigarettes and
alcohol are subject to much higher taxes. This is to help
discourage people from consuming such items. The government uses
this money to help promote the reduction of consumption
and help people suffering from the detrimental consequences of using them.
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