Here’s a look at the worst tax laws in America.
The list is not exhaustive, but is a quick look at what you might need to know.1.
Income taxThe Internal Revenue Code makes no distinction between income and capital gains, but if you earn $50,000,000 and then sell it for $100,000 in a mutual fund, you can pay a $50 federal income tax on the gain and $10 state income tax.2.
State income taxYou can deduct state income taxes paid on qualified business income (for example, income from the sale of a company stock, which you also could use to offset your state income).
But you can’t deduct state property taxes paid from your home or businesses.3.
Local property taxesThere are no property taxes in Hawaii, but there are some property taxes that are based on where you live.
The Honolulu Municipal Code makes it a crime to rent, lease, or sell property in Hawaii.
There are some exceptions for the city and county governments.4.
Business taxHawaii has no state sales or use tax, but some cities and counties charge a local business tax.
For example, Honolulu charges $0.05 per square foot for the sale and lease of a single-family home, and $0,05 per unit of the same home.
A second property must be purchased or leased for a new home.5.
Personal income taxIf you earn more than $100 per month from your job and then pass the money on to your partner or another family member, you may pay a tax on any of the money you earn, regardless of whether you receive it directly or through employer-provided deductions.
But you may not pay a personal income tax if you make more than a certain amount each month.6.
Child taxThere are two kinds of child tax: a credit for the first $5,000 of child support owed, and a tax credit for child support received after that amount.
You can only get a credit if you owe $500,000 or more in child support.7.
State and local income taxHawaiian state and local taxes are based primarily on the tax code.
You pay a federal income and sales tax and a state property tax based on your home, but you can also get a local income or sales tax.8.
Estate taxHawian estate taxes are assessed at a flat rate based on the value of your home.
There’s a state estate tax, which is assessed at 0.2 percent of the value and is also imposed on a home’s value.
If you sell a home for $5 million, you’ll pay a property tax of 0.3 percent.
If the home is worth $10 million, the tax rate will be 3.6 percent.9.
Tax deductionYou can claim a state or local property tax deduction if you itemize deductions on your tax return.
The total amount you can claim is based on how much you earn from your income, not your property value.10.
State sales and use taxHawana’s sales and uses tax is 0.5 percent on sales and 0.25 percent on use.
There is no sales tax on certain businesses.
You can also claim a tax deduction for property taxes you pay on your business if you own it.
You may have to pay tax on an interest on a mortgage you purchased to buy your home if you sell the property and don’t deduct the mortgage interest.
If your business is taxable, you don’t have to file an income tax return if you don.
