What Are the Three Types of Taxes?

January 25, 2019

Encino tax advisors in Los Angeles County and well-quoted judges such as Learned Hand have pointed out that there is nothing wrong with arranging your affairs so that you pay low taxes. According to the IRS, attempting “to reduce, avoid, minimize or alleviate taxes by legitimate means is permissible.” There are three basic tax types and each can be considered a candidate for legitimate reduction or avoidance.

1. Income Taxes

In addition to the federal tax on income, California residents also pay a state personal income tax which is currently ranked highest in the nation. Corporate income in California is currently taxed at 8.84 percent.

Capital gains, such as proceeds from the sale of stocks, bonds or real estate are considered taxable income. California residents are taxed at both the federal and state levels.

When property is transferred to an inheritor when the original owner dies, the federal government considers the value of those assets as taxable income. A gift, if it carries a value greater than $15,000, is subject to a federal gift tax.

2. Property Taxes

In Los Angeles County, personal and business property is taxed. Business property can include fixtures and equipment. Property owners can stay informed regarding which of their assets are taxable by consulting with knowledgeable Los Angeles Tax Preparation services.

3. Goods and Services Taxes

A California state sales tax is charged at the time of purchase for certain services and various tangible items acquired through retail transactions. Exceptions include medical devices, some groceries and prescription medicine. Retailers and service providers are responsible for collecting sales taxes from their customers and then forwarding the amounts collected to the state.

Learn All You Can About Your Tax Liabilities

What are the best ways to minimize your overall tax liability? It can get complicated. Rather than try to figure it all out on your own, contact experienced Encino Tax Consultants to learn how your personal and business affairs can be best arranged so you pay only the amount the laws demand and no more.