Top 10 Worst States for Taxes

Now that tax season has arrived, we are forced to realize how much we pay to our state governments. As April approaches, it’s good to access your overall tax bite and how it’s affected by where you live. The state you live in can significantly change how much money you get to keep at the end of the year and how much you have to hand over to your state.

Beth Braverman of the Fiscal Times compiled a list of the states with the toughest tax climate from the Tax Foundation’s data for 2014. “The Tax Foundation collects data on more than 100 tax provisions for each state and then ranks them to create its annual State Business Tax Climate Index.” The foundation looks at which states have the highest tax rates, and also if they are overly complex or unfair to certain individuals.

“One thing that’s important to remember here is that state and local tax rates are only part of the total sales tax story,” said Tax Foundation spokesperson Richard Borean by email. “Equally important are sales tax bases — what the tax applies to — which can have a palpable impact on how much the tax collects in revenue and how the tax affects the economy.”

Here are the worst ten states for taxes in 2014:

10. Maryland

Top state income tax rate: 5.75 percent

Sales tax rate: 6 percent

Per capita property tax: $1,467

Maryland has relatively high taxes across the board. The state is looking into lowering  its corporate income tax from 8.25% to 6% in the next five years and to increase the estate tax threshold from $1 million to $5.25 million.

9. Connecticut

Top State Income tax Rate: 6.7 percent

Sales tax rate: 6.35 percent

Property tax per capita: $2,522

Connecticut has extremely high property taxes and sales, income and corporate taxes in Connecticut are also worse than average. The state is also the single, only state to have a gift tax.

8. Wisconsin

Top state income tax rate:7.65 percent

State sales tax:5 percent

Per capita property tax:$1,724

Wisconsin ranks among the worst states for taxes due to its relatively high income tax plus alternative minimum tax on individuals. However, the state has passed some favorable property and corporate tax reforms.

7. Ohio

Top state income tax rate: 5.33 percent

State sales tax: 5.75 percent

Per capita property tax: $1,140

While Ohio’s tax rates look low, Ohio is on our top ten list because of a change in the Tax Foundation’s methodology. The group now penalizes states for how they treat LLCs and S corporations. Ohio is on the list for having 10 brackets.

6. Rhode Island

Top State Income Tax Rate: 5.99 percent

Sales tax: 7 percent

Property tax per capita: $2,083

High corporate and property taxes made Rhode Island place poorly. Rhode Island was also named least tax-friendly state in the country for retirees by Kiplinger Magazine, due to taxing Social Security benefits, pension income, and other sources of retirement income. However, next year the state’s ranking will probably improve because the state’s corporate income tax will fall from 9% to 7%.

5. Vermont

Top state income tax rate:8.95 percent

State sales tax:6 percent

Per capita property tax: $2,197

High property and income taxes resulted in Vermont’s poor showing on the Tax Foundation ranking. At 8.95 percent, it is sandwiched between New York and New Jersey with one of the highest marginal income tax rates in the nation. Vermont makes up some lost ground in the overall rankings with its state sales tax, which the Tax Foundation ranks at 16th from the top.

4. Minnesota

Top state income tax rate: 9.85 percent

State sales tax: 6.88 percent

Per capita property tax: $1,535

Minnesota made several changes to its tax code this year including: raising  its top income tax rate by 2%, and installing an individual tax hike on earners making more than $150,000. The state also has high sales, property and corporate income taxes.

3. California

Top State Income Tax Rate: 13.3 percent

Sales tax: 7.5 percent

Property tax per capita: $1,450

California is known for having one of the highest income taxes in the country at 13.3% on $1 million of taxable income. The state also has the highest state-wide sales tax rate and its 7.5% sales tax rate mandates a 1% local tax rate.

2. New Jersey
Top state income tax rate: 8.97 percent

State sales tax:7 percent

Per capita property tax: $2,896

New Jersey taxes score poorly in about every tax category. The state has the highest rates for every type of tax and adds many complexities.

1. New York

Top State Income Tax Rate: 8.82 percent

Sales tax: 4 percent

Property taxes per capita: $2,280

New York wins the worst state for taxes. The state had a high individual tax rate and high sales tax However, Governor Andrew Cuomo has announced the state’s new tax relief commission will be looking for ways to change the state’s tax code.

There it is, the list of the worst states to live in for taxes. If you are struggling your current geography, we hope this list will help you determine if another location has more possibilities for you.

Tax season is not only expensive, it can be long and confusing. In order to help people avoid costly tax prep errors, Advocate Tax Solutions offers a superb tax preparation program starting at as low as $25/month. Our tax experts are also here to be your go to resource for all of your tax preparation, accounting, and back tax questions. Call 888-737-0200 today and talk to a consultant for free. Let’s start solving your tax problems together.

For more information go to advocatetaxsolutions.info

What the IRS Doesn’t want you to know: Quick Tips for Lifting IRS Levies and Wage Garnishments

Advocate Tax Solutions offers immediate Tax Representation, alleviating the unwanted stress in dealing with the IRS.

Have an IRS Levy or Wage garnishment that you need lifted now?!  Use our secret weapon!

Although no tax problem is created equal consisting of hundreds of different variables due to diverse financial situations, one constant remains.  The IRS Code, and if used correctly can enable taxpayers the ability to stop wage garnishments or lift levies.

So how can you stop them you ask?  We at ATS call this technique the “SIA Levy Lift” names after the IRS’ Streamline Installment Agreement.  If you owe less than 25,000 to the IRS you aren’t required to disclose your income and expense information to be placed in a payment plan of up to five years out.  Try and post date the first payment 60 days, that will allow your representation (or yourself) ample time to generate and or file the necessary information needed for other resolutions.  Once done the levy will be immediately removed and all garnishments halted enabling the tax payer the full benefit of their check.

During this time frame we suggest contacting an Attorney or CPA versed in Tax Defense & Resolution Services to prepare an Offer in Compromise (tax Settlement) or Partial Pay installment Agreement (Payment based on Disposable Income).  Once their financial analysis is completed in house they can determine within a reasonable amount what programs you can qualify for and the next steps in the process.

BEWARE OF SCAMS and RIP OFFS!

There are plenty of great organizations out there that can help you, but never trust one that sends you a settlement offer in the mail prior to any work or financial analysis being conducted!  USE. YOUR. HEADS. PEOPLE!  It should take MAX 30-60 Days to conduct the financial analysis and another 6-8 months for the IRS to process the Offer in Compromise (OIC) Application Packet.

For more information about these programs go to IRS.gov or contact Advocate Tax Solutions, LLC for a free no obligation consultation at (888)-737-0200.

ATS | Advocate Tax Solutions | Trusted Advisers

Tax Problems? Warning! Don’t get Scammed! Learn The Truth About Tax Settlement and the IRS’ Offer in Compromise!

OFFER IN COMPROMISE

Advice from a Partner at Advocate Tax Solutions, LLC:

Don’t get Scammed! 

Hello, my name is Asher Mellul and I am the Director of Operations at Advocate Tax Solutions, LLC, a nationwide Back Tax Defense and Preparation Firm headquartered in the downtown Chicago area.  Most of our clients owed more than $10,000 to the IRS, are or at one time were facing escalated collections in the next 30 days and had an inability to full pay their tax debt prior to engagement.  SO it is safe to say I have seen my fair share of Offer in Compromises, and have also heard a few, for lack of a better word, doozies from clients that engaged ill prepared and inexperienced “tax relief companies” that for one reason or another did not or could not get the job done before they finally found us.  I thoroughly believe that a Tax Defense and Back Tax Preparation Firm’s competitive edge comes starts from within.  At ATS, we go to great lengths to attract, inspire and recruit talented Tax Attorneys, Certified Public Accountants and experienced support staff to ensure our edge remains vivid and transparent both at the initial consultation to the final case report.  

Our competitors will tell you what you want to hear, just to gain your business. Don’t be misled and believe your tax problems can be fixed immediately, it will take a lot of work, and your investment in time to attain the best result. If you were told you qualify for an Offer in Compromise in a 15 minute conversation, it’s safe to say CONGRATULATIONS…you are being Ripped Off. There are many steps that must take place prior to any settlement with the IRS.

A thorough Back Tax and Financial Analysis is performed prior to making any offers to the IRS and is necessary to determine an accurate minimum settlement amount the IRS will accept.  The reason? Simply put,  included in your IRS Offer in Compromise Application is substantiation for all of your listed expenses, a written proposal and most importantly a check for the first settlement installment or the complete settlement amount (contingent upon which Offer in Compromise option you selected).  The issue is, the IRS will review your offer in compromise then determine your eligibility.  If rejected, they keep your money, credit it to the back tax debt, then you are back to square one, well, negative square one because you paid that tax thousands to submit the offer in compromise that they knew would get rejected.

Due Your Due Diligence! Research All Tax Firms on the BBB and Ripoff Report Before Dishing Out Big Bucks!

When processed correctly, an individual can successfully settle their debt with the IRS through the Offer in Compromise program. This program allows taxpayers to settle with the IRS on back tax debt that has either been incorrectly assessed or has created an economic hardship or would be unfair and inequitable for liabilities owed to be paid.

The IRS Code states: “We will accept an Offer in Compromise when it is unlikely that we can collect the full amount owed and the amount you offer reasonably reflects the collection potential…” (Internal Revenue Code section 7122).

If one is eligible for an Offer in Compromise (OIC), it is possible to fully and completely eliminate the taxes they owe – including penalties and interest. Fortunately, the IRS has no preset settlement amount, so if an individual(s) meet(s) these guidelines, experience and diligence is the only weapon to get the best possible deal.  Our proprietary tax valuation method allows us to forecast the outcome and predict whether or not we believe it makes sense to submit an offer in compromise to the IRS and or State Taxing Authority.  

 

Three Types of OICs

The IRS may accept an offer in compromise based on three grounds:

1 – Doubt as to Collectability – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.

Example: A taxpayer owes $25,000 for unpaid back tax debt and agrees that the back tax he/she owes is valid. However, the taxpayer’s monthly income does not meet his/her necessary living expenses (more money going out (expenses) then coming in (Income)). He/She does not own any real property and does not have the ability to fully pay the Back Tax Lien now or through monthly installment payments (if you were to sell everything today, including your truck, there wouldn’t be enough to cover the tax debt).

2 – Doubt as to Liability – A legitimate doubt exists that the assessed back tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.

Example: The taxpayer was a partner of a corporation from 2006-2008. In 2009, the corporation accrued unpaid payroll taxes and the taxpayer was assessed a penalty as a responsible party of the corporation. The taxpayer was no longer a corporate officer and had resigned from the corporation in December of 2008. Since the taxpayer had resigned prior to the payroll taxes accruing and was not contacted prior to the assessment, there is legitimate doubt that the assessed tax liability is correct.

3 – Effective Tax Administration – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.

Example: Mr. & Mrs. Jones have assets sufficient to satisfy the tax liability and provide full-time care and assistance to a dependent child, who has a serious long-term illness. It is expected that Mr. and Mrs. Jones will need to use the equity in assets to provide for adequate basic living expenses and medical care for the child. There is no doubt that the tax is correct.

Advocate Tax Solutions is a nationwide tax defense firm engaged in practice before the IRS and now 47 State Tax Administrations. ATS is an accredited member of the BBB with 1000’s of clients all over the country, for a reason, we do business the right way. We submit hundreds of Offer in Compromises and specialize in filing emergency petitions for tax relief and back tax settlements.

Questions? Need Help?

Call us today@: (888)737-0200 

Receive your free NO obligation consultation!

This message was brought to you by Advocate Tax Solutions, a Chicago based Tax Defense and Preparation Firm.