Hyden, Miron & Foster, PLLC Law Blog

Monday, June 27, 2016

STATE AND FEDERAL TAXES—WHAT IS YOUR LIABILITY?

Are your assets taxed pursuant to the Arkansas Constitution?  Liability for personal income tax depends on your tax bracket, which is determined by your income.  This can seem complicated if there are several tax brackets in your state, as in Arkansas.  You may qualify for an annual personal exemption for any taxes on your income.  This is important because your taxable income may be lowered under the state or federal tax schemes.

If you own a business, a home, personal property, land, or stocks, you would be well advised to seek counsel regarding capital gains tax under federal and state law.   Your income tax rate may be correlative to your capital gains tax at the state level.   Depending on your capital or net worth of a partnership, corporation, or other business entity, you could be subject to a franchise tax and may need to report certain figures on your annual tax return.  Moreover, being taxed at an individual or corporate rate is likely to be contingent on your business form.

Likewise, if you are involved in the sales industry, you can be responsible for a sales and excise tax.  However, you may be permitted to pass a portion of the excise tax into the price of the item sold, as a means of placing some of the tax burden onto consumers.   Furthermore, the state is frequently owed a portion of your business profits through the corporate income tax.   A professional can determine the percentage you would be liable for, so you can better maintain the financial stability of your business.  

If you are looking to purchase real estate or an automobile, you should remain informed of the property tax that you will be subject to under state law.   An attorney can calculate the amount owed for the tax by using certain valuation methods pertaining to Arkansas law—this will not only consider the actual value of the property, but the property’s value in the market place.   Once again, certain tax values may be diminished if exemptions qualify.

Additionally, although you might be exempt from taxes on your estate or an inheritance under Arkansas law, you may need to pay a federal estate tax.  In anticipation of any state or federal tax implications, a full evaluation by an attorney will allow you to devise a feasible budget and financial plan, which will prevent tax liability from ever blindsiding you.


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