Wednesday, June 26, 2013

Types of Taxes

Taxes are a fact of life. They are necessary to fund various institutions, programs and projects such as Social Security, Medicare, the military, schools, emergency services and highways. There are many different types of taxes; however, the most common are listed below.

Federal and State Income Taxes

Most everyone knows what federal and state income taxes are, and they know that they must file them each year. Federal taxes are handled through the Internal Revenue Service, and the deadline to file is April 15 of every year. While many people will need to pay taxes at that time, some will get refunds.

The requirements for state taxes vary, and some states do not even collect taxes. However, most of them do. As such, it is best for you to inquire with your state as to whether or not you need to file. You should also ask when the deadline is. Additionally, if you own a business, you may need to file federal and state taxes more than once per year.

Property Taxes

If you own any real estate, you will need to pay property taxes, known in some states as real estate taxes. Real estate typically includes such things as a personal home, a rental home, a piece of land or a commercial property. These taxes are based on the assessed value of the property in question. 

Property taxes are often collected by the state or county that you reside in and in some states, you may also need to pay property taxes on such things as recreational vehicles (RVs), watercraft and pets. Requirements, restrictions and due dates may vary by state or county.

Sales Taxes

Just as with income taxes, you probably already know what sales taxes are. Sales taxes are collected on the state level, and you pay them whenever you buy something or pay for a service. The amount of sales tax you will need to pay depends on the item or service you pay for and the state you live in. 

Payroll Taxes

If you own a business and pay people to work for you, then you are responsible for paying payroll taxes. These taxes are taken out of your employees' salaries before you distribute their paychecks. Also known as FUDA or FICA, payroll taxes help fund such programs as Social Security and Medicare. 

Other Taxes

These are the most common types of taxes that you need to pay regularly. However, there are more taxes you may need to pay depending on your unique circumstances. These can include such things as excise taxes, estate taxes, tariffs, corporate taxes and capital gains taxes.

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