Archive for October, 2009
State Income Tax Brackets and Rates
The easiest way to understand federal income tax, state income tax and all those other concepts that come with them is by understanding what the progressive income tax scheme is. Simply put, this scheme tells that the tax charge rate rises as income gets larger. For instance, if you compare federal income tax brackets to state income tax brackets, you will find lots of trend similarities.
Basically, except for those living in Alaska, Nevada, Florida, Texas, Washington, South Dakota, and Wyoming, every employee in the United States needs to know about state income tax. Majority of the states, 34 actually, impose state income tax aside from federal income tax. There are also cases where states allow cities to apply an income tax rule above the state income tax and federal income tax. This applies in New York City, for instance. In this city, aside from a state income tax (the maximum from which is 8.14%), there is also a city income tax that reaches to 4.00%. Living in a city that applies two tax rules is definitely more expensive if compared to the cases in “federal income tax only” cities.
The state income tax rates usually range from 1% to 10%. Although the state income tax rule carries different rates, it works in the same way as the federal income tax rule. California, has the highest rate of state income tax. It has a maximum tax rate of 10.3%. Illinois, on the other hand, has the lowest. It levies a flat tax of only 3%.
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Income Tax Problems Can Be Solved
Many income tax problems start with marriage, divorce and death. Many people who are single file their own return and then don’t worry about owing because they are simply filing a W-2. They either know that they owe or get a refund. A refund is the best thing to get in the mail because no one wants to owe money. But even if you owe money, at least as a single person you know where you stand with the IRS and avoid owing money. Getting married, getting divorced, or experiencing the death of a spouse can leave many people with owing money to the IRS. If your spouse doesn’t declare the right amount of income, divorces you, or even passes away, you may not be able to sort out owed money without the help of a qualified IRS attorney. An IRS Attorney may be the best way to sort out your IRS debt.
When a spouse isn’t honest with someone about their income, money may not be immediately available. A spouse can have unreported income and most people don’t understand that if they file a joint return, they may be responsible for their spouse’s income and have money owing. The money situations don’t stop there. If you let your spouse complete your tax return and don’t look at it, they may declare deductions that you are not aware of. This is okay if the deductions are valid and accompanied by receipts, but what if they aren’t? You may be liable for any deductions that a spouse declares that aren’t allowed by the IRS. Situations like these can last for years and may not go away unless you work with an IRS Attorney.
But it doesn’t stop here. Money issues get more complicated with divorce. When a couple gets divorced, it’s a whole different ballgame. If the fiscal year isn’t complete when the settlement is finalized, you still have to deal with filing. Some divorces are amicable, but many aren’t. April is the time when most estranged couples experience problems with the IRS. Don’t be one of them. If you get divorced, many ex-spouses try to get out of paying money they owe. They create many money issues because they expect an ex-spouse to absorb the cost of what may be owed, or simply don’t make records available for what may be crucial when an audit takes place.
A spouse’s death can be even worse. There may be items that you do not even know about because you may have left the tax preparation up to them. When a spouse dies, you may not be able to find receipts or even records of income and expenditures that may help you settle a claim without problems. An IRS attorney can step in and give you advice that will help you solve any issues that you may have.