It’s tax season! Taxpayers have until April 17 to file their 2017 taxes. There are so many types of taxes you may hear about during this time but keeping up them may be a little confusing\g. Grady Newsource is here to explain some of the basics of taxes.
Federal vs. State Income Tax
All citizens of the United States are required to pay federal income tax regardless of the state they live in. The Internal Revenue Service (IRS) is the federal agency that enforces those laws and collects taxes. The amount of federal income tax you owe each year is based on your income level. State income taxes are separate from the federal tax laws and are levied by an individual State’s government. State taxes vary depending on where you live. For example, Wyoming, Washington, Nevada, Alaska, Florida, South Dakota and Texas do not impose income taxes.
Types of State and Local Taxes in Georgia
Although the federal government gives money to the states, states have the right to collect necessary revenue to maintain their government through taxes, licenses, and fees. There are various common states taxes such as personal income tax, sales tax, property tax, and fuel tax. According to the 2017 Annual Statistical Report by the Georgia Department of Revenue there are eight types of imposed taxes: alcohol taxes, corporate income taxes, individual income tax, motor fuel tax, motor vehicle tags and titles tax, property tax, sales and use tax, and tobacco tax.
What Taxes Pay For
Taxes helps governments pay for public services. These public services include but aren’t limited to public schools, healthcare, transportation, welfare, parks, infrastructure, correction facilities, pensions and environmental programs. Assistant Professor in Accounting at the University of Georgia, Dr. Paul Demere, notes the state is required to release an annual report detailing how tax money is spent and anyone interested can review this information. To view the 2017 Comprehensive Annual Financial Report for the State of Georgia click here. You can also review a summary of tax revenue collections each year as well. To see the 2017 Annual Statistical Report by the Georgia Department of Revenue click here.
Facing Tax Fears
With all the taxes imposed in Georgia and by the federal government, filing can seem a bit intimidating to some people but it doesn’t have to according to Dr. Demere.
“Taxes shouldn’t be scary. The forms can look complicated but you have to look at what applies to you. They look complex because they have to apply to everyone from college students to business owners with complicated financial portfolios. Remember as crazy as it sounds up front, 80 to 90 percent won’t apply. There are many great tax programs such as TurboTax and H&R Block. They can help give you assurance,” says Dr. Demere.