Hyden, Miron & Foster, PLLC Law Blog

Tuesday, July 19, 2016

State Taxes & How They Affect You

A big part of estate planning requires the anticipation of various taxes.   Taxes can range from personal income tax, estate taxes, use tax, and the like.  For example, if you inherit a decedent’s property, you will likely need to pay inheritance taxes to the state.  However, estate taxes are generally removed from the actual estate of the decedent. 

You should also remain aware of your state’s tax laws that may affect you.   Certain taxes are based on your annual income and depend on the threshold you fit under.   A “progressive tax code” exists in the state of Arkansas and you may be required to file a specific form for reporting purposes.   

It is advised to remain updated on your reporting requirements, so you do not mistakenly underpay and fill out your governmental forms incorrectly.  If you are being charged with “tax evasion,” your attorney may be able to fight this if the error was an unintentional mistake, rather than an intentional act.  It is likely to be in your best interest to avoid a criminal trial at all costs.  

Generally, each citizen is required to report their income, the number of members within their current household, and expenses.  The Internal Revenue Service (IRS) is obligated to make certain “deductions” from these numbers to arrive at your “adjusted gross income” (AGI).  Furthermore, an attorney can advise you as to whether you qualify for any “credits” that could offset the total you owe in taxes. 

The IRS has the power to conduct an investigation into your finances if you have misrepresented your income, exaggerated your expenses or your household number, or otherwise provided misleading information about your circumstances. 

You should also be aware of retail sales tax or consumer taxes, especially if you are running a business.  Certain items that are correlated with an increase in public expenses are typically taxed at a higher rate, such as cigarettes.  You could also be found liable for tax evasion if you sold certain consumer goods without taxing the public.  If you are or think you are liable for tax fraud, consult an attorney to see how to mitigate the consequences and rectify the situation.

 


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