Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline. Excise taxes are often included in the price of the product. There are also excise taxes on activities, such as on wagering or on highway usage by trucks. Excise tax has several general excise tax programs. One of the major components of the excise program is motor fuel. Excise taxes are usually paid initially by the manufacturer or retailer.
Property Tax is a capital tax on property imposed by municipalities; based on the estimated value of the property. Deductible real estate taxes are generally any state, local, or foreign taxes on real property. They must be charged uniformly against all property in the jurisdiction at a like rate. Many states and counties also impose local benefit taxes for improvements for streets, sidewalks, and sewer lines. These taxes cannot be deducted. However, a taxpayer can increase the cost basis of the property by the amount of the assessment. Local benefits taxes are deductible if they are for maintenance or repair, or interest charges related to those benefits.
Deductible personal property taxes are those based only on the value of personal property such as a boat or car. The tax must be charged to the taxpayer on a yearly basis, even if it is collected more than once a year or less than once a year.
Sales Taxes is a tax imposed by a state or local government on sales collected by retailers at the point-of-sale. It's based on a percentage of the selling prices of the goods and services. Forty five states, plus the District of Columbia impose a sales tax. If the taxpayer files a Form 1040, and itemizes deductions on Schedule A, he or she has the option of claiming either state and local income taxes or state and local sales taxes. (the taxpayer cannot claim both) if the taxpayer saved his or her receipts throughout the year he or she can add up the total amount of sales taxes actually paid and claim that amount.
Many states exempt charitable, religious, and certain other organizations from sales or use taxes on goods purchased for the organization's use. Generally such exemption does not apply to a trade or business conducted by the organization.
The Gift Tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value in return. The tax applies whether the donor intends the transfer to be a gift or not. The Gift Tax applies to the transfer by gift of any property. The taxpayer makes a gift if he or she gives property (including money), or the use of or income from property without expecting to receive something of at least equal value in return. If the taxpayer sells something at less than its full value or if he or she makes an interest-free or reduced-interest loan, he or she may be making a gift. The annual exclusion for gifts is $14,000 for the 2014 tax year.
Its considered non-taxable gifts:
- Gifts that are not more than the annual exclusion for the calendar year;
- Gifts to a political organization for its use;
- Gifts to charities;
- Gifts to one's (US Citizen) spouse;
- Tuition or medical expenses one pays directly to a medical or educational institution for someone. Donor must pay the expense directly. If donor writes a check to donee and donee then pays the expense, the gift may be subject to tax.
Estate Tax is a tax levied on an heir's inherited portion of an estate if the value of the estate exceeds an exclusion limit set by law. The Estate Tax is mostly imposed on assets left to heirs, but it does not apply to the transfer of assets to a surviving spouse. The right of spouses to leave any amount to one another is known as the "Unlimited Marital Deduction".
When someone in your family dies and the property of the deceased transfers to you, the federal government imposes an estate tax on the value of all that property. You only pay estate tax when the tax on the net taxable estate exceeds your remaining balance of the unified credit.
Use Form 706
The main problem in completing a tax return is to figure out what income is taxable and the deductions that can be claimed. The rest is largely mechanical: add and subtract correctly, follow the instructions on the tax return and comply with procedural requirements.
The following checklist might be useful:
- Collect the taxpayer's data;
- Review taxpayer's prior returns;
- Select the proper tax return form;
- Determine gross income by totaling all income not specifically excluded;
- Compute the adjusted gross income (AGI) by subtracting the adjustments;
- Subtract itemized deductions from AGI, if their total exceeds the correct standard deduction amount;
- Subtract the correct number of exemptions to determine taxable income;
- Use the tax table (if taxable income is under $100,000) or the tax computation worksheet (if taxable income is $100,000 or more) to determine/calculate tax amount;
- In the following order:
- Add any alternative minimum tax;
- Reduce any tax due by any tax credits (such as child tax credit, credit for child and dependent care expense, adoption credit, etc);
- Add other taxes (such as self-employment tax, household employment taxes);
- Reduce tax by any payments (such as withholdings, estimated tax payments, earned income credit, etc)
- Determine the tax refund amount or the amount owed;
- Sign and file the tax return on time.
If a taxpayer died before filing a return for 2014, the taxpayer's spouse or personal representative may have to file and sign a return for that taxpayer. A personal representative can be an executor, administrator, or anyone who is in charge of the deceased taxpayer's property. If the deceased taxpayer did not have to file a return but had tax withheld, a return must be filed to get a refund. The person who files the return must enter "Deceased", the deceased taxpayer's name, and the date of death across the top of the return. If this information is not provided, it may delay the processing of the return.
The final income tax return is due at the same time the decedent's return would have been due had death not occurred. A final return for a decedent who was a calendar year taxpayer is generally due on April 15 following the year of death, regardless of when during that year death occurred. However, when the due date falls on a Saturday, Sunday, or legal holiday, the return is filled timely if filed by the next business day.
If the taxpayer's spouse died in 2014 and he or she did not remarry in 2014, or if his or her spouse dies in 2015 before filing a return for 2014, the taxpayer can file a joint return. A joint return should show the taxpayer's spouse's 2014 income before death and his or her income for all of 2014. Enter "Filing as surviving spouse" in the area where the taxpayer signs the return. If someone else is the personal representative, he or she must also sign.
The surviving spouse or personal representative should promptly notify all payers of income, including financial institutions, of the taxpayer's death. This will ensure the proper reporting of income earned by the taxpayer's estate or heirs. A deceased taxpayer's social security number should not be used for tax years after the year of death, except for estate tax return purposes.
