In our previous blog post HERE, we discussed some taxes Americans hate. There are so many, we could probably make a series on the subject!
Below you’ll find some more unwanted taxes (as if we want any to begin with) and some things you can do to minimize what you pay.
1. Phase-outs of Tax Provisions: Some tax credits, such as the child tax credit, come with an income limit to qualify, which reduces or even completely eliminates the credit as income goes up. With the child tax credit, you can reduce your federal income tax by up to $1,000 for each child under age 17 but for married taxpayers filing jointly who make more than $110,000 ($75,000 if you’re single), the credit is reduced by about 5% of AGI over these limits. This tax particularly stinks because aside from earning less money, there’s nothing you can do about it.
2. Federal Estate Tax: The tax on property transferred to heirs at death. This, like being taxed on your social security, seems like double taxation. Most estates are avoiding this tax. Roughly 3,700 estates are expected to owe federal estate tax this year, according to The Wall Street Journal. Why? Because estates with combined gross assets below the IRS exemption of $5.34 million don’t have to pay the tax. Estates too large to benefit from this exemption typically set up tax-avoiding trusts.
3. Property Tax: Every homeowner needs to pay property tax to their state, county and/or local jurisdiction. Unfortunately, property taxes generally increase after you make improvements to your home. The taxes can also increase if your municipality decides it needs extra funds. The good news is if you’re a senior, a military veteran or widowed, there are often exemptions.
If you’re looking for some professional tax help – whether it’s personal or business – call Tax Alternatives in Nashville at 615-742-1099.