10 hidden taxes you didn't know you're paying
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(MoneyWatch) The dreaded "fiscal cliff" could raise taxes for 80 to 90 percent of Americans, if no deal occurs before the end of the year. But with attention focused on the political wrangling in Washington, the American Institute of CPAs is out with 10 common taxes many Americans don't realize they are paying. To help individuals plan for these insidious taxes, the AICPA has also created the Total Tax Insights calculator.
1. Medicare tax: The amount withheld by your employer from your paycheck (often under the line item "FICA," which stands for Federal Insurance Contributions Act) helps cover the cost of running the Medicare program, the federal system of health insurance for people over the age of 65. Employers pay one half of the FICA tax and employees pay the other half. The employee contribution is 6.2 percent for Social Security and 1.45 percent for Medicare on wages up to $110,100. The temporary payroll tax cut for tax years 2011 and 2012 reduced the employee portion for Social Security by 2 percent.
2. Self-employment tax: A Social Security and Medicare tax for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. The self-employment tax consists of two parts: 12.4 percent for Social Security and 2.9 percent for Medicare (hospital insurance) on income up to $110,100. However, the temporary payroll tax cut for tax years 2011 and 2012 reduced self-employment tax by 2 percent. You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax.
3. Alternative minimum tax (AMT): The alternative minimum tax was created in 1969 to ensure that wealthy taxpayers pay at least some minimum amount of federal income tax, regardless of deductions, credits or exemptions. In essence, it is a flat tax with two brackets, 26 percent and 28 percent. The problem with AMT is that it now ensnares not only the wealthiest Americans, but 4 million to 5 million taxpayers with annual incomes between $200,000 and $1 million. Congress has yet to approve a new inflation "patch" that would allow millions to escape AMT (the last patch expired in December). If a new one is not enacted, the AMT will hit 31 million taxpayers this year, reaching deeply into the middle class.
The utility taxes that Americans pay can add up quickly, as do the so-called "sin taxes" on alcohol and tobacco products.
4. Electricity or natural gas tax: A tax collected by energy suppliers based on consumption during the billing period.
5. Cable tax: Tax imposed on cable television subscribers.
6. Landline phone tax: Federal and state tax associated with use of a fixed phone line.
7. Cellphone tax: Federal and state tax imposed on mobile telephone users.
8. Federal and state gasoline tax: A tax on every gallon of gasoline sold, which account for 11 percent of the cost of a gallon of gas, according to the Energy Information Administration. Federal excise taxes are 18.4 cents per gallon and state excise taxes average 23.44 cents per gallon.
9. Cigarette tax: The tax on cigarette use varies from state to state. New York City has the highest rate, charging $4.35 per package of 20 cigarettes on the state level, plus an additional local excise tax of $1.50 per package of 20 cigarettes, bringing the combined tax rate in New York City to $5.85.
10. State alcohol tax: The tax imposed on the purchase of beer, wine and spirits varies state by state. The highest rate for spirits can be found in Washington and the highest for beer is Alaska. Wyoming has the lowest rate.
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Excise, v., to cut.
Yes, they surely are getting a cut. We do, however, need the roads.
I do fail to see why we need a cable TV tax, though. What does it support?
And the "required fees" that you see on cable TV. They charge sales tax on those fees, as well, even though the government itself requires them. To me, that's double taxation.
In other words, we are all in this together and we ALL contribute to our mutual good.
I didn't know about 2 or 3. I daresay that most people with an intelligence level of "dimwit" or higher know about the others.
What a waste of time.
1) Making Love - what a surprise! and
2) Partying, which basically means drinking with friends.
So you have just stated that the second most popular activity on the Planet is "Stupid." What do you do for fun?
People do earn over 200K - if they didn't, your taxes would be a lot higher. Jill's point is that the AMT is designed to catch millionaires who can afford tax lawyers to avoid their paying any income tax: it shouldn't apply to high-end middle class.
Landlines are mainly useful as carriers for ADSL broadband, but I still get old-fashioned phone calls on mine too.
Smoking is stupid, I agree, but people in a free country have the right to do want they want, even stupid things, as long as they pay the full cost of their decision. The price of a pack of cigarettes should be high enough to cover the full cost for medical treatment of the users' lung cancers and other health risks associated with smoking. If that means cigarette taxes need to double, so be it. If the higher price forces some people to quit - even better.
If you think taxes are insanely high (they are), and aren't happy about it, revolt against your government. Start throwing tea in to the harbor. Start a revolution and start tarring and feathering the tax man when he comes to take your money, giving you nothing in return.
I see you must be a teatard or you wouldn't play that whole "tea in to [sic] the harbor" myth.
IF you knew anything about the history of the United States, you would have discovered that the Boston Tea Party from whence the Tea Party took its name was not what it has been portrayed as. The reality was that the only tax being charged in the colonies was a small one on tea, both to protect the British right to tax its territories and to help bail out the British East India Company. The protest was not about the tax at all, but about the BEIC's monopoly on tea distribution in the New World. In other words, the nice colonists wanted a taste of the action.
As for getting nothing in return, wow! You really don't have a clue, do you?
By your nickname, I presume you hang with bikers or may be one yourself. That means road trips on highways kept safe with DOT repairs and upgrades. Stop for a burger? The tax-funded USDA makes sure the meat in said burger is not going to kill you. The state patrol, while you might not care for them, are there to protect you from crazy drivers that might want to run you down. Cell phone to call your buddies? That federal cell tax makes sure there are enough frequencies available for your signal to carry across several towers. I could go on, but you get the point.
You may think you get nothing, but even the Internet you used to come here and complain had its beginning in federal agencies (along with universities) funded with--you guessed it--taxes!