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Wednesday, November 14, 2012

10 hidden taxes you didn't know you're paying

We need to get this to the Fiscal Cliff! What ...
We need to get this to the Fiscal Cliff! What could go wrong? (Photo credit: DonkeyHotey)
By 
JILL SCHLESINGER / 
MONEYWATCH/ November 12, 2012, 11:06 AM

Taxes
Taxes (Photo credit: Tax Credits)
(MoneyWatch) The dreaded "fiscal cliff" could raise taxes for 80 to 90 percent of Americans, if no deal occurs before the end of the year. But with attention focused on the political wrangling in Washington, the American Institute of CPAs is out with 10 common taxes many Americans don't realize they are paying. To help individuals plan for these insidious taxes, the AICPA has also created the Total Tax Insights calculator."

1. Medicare tax: The amount withheld by your employer from your paycheck (often under the line item "FICA," which stands for Federal Insurance Contributions Act) helps cover the cost of running the Medicare program, the federal system of health insurance for people over the age of 65. Employers pay one half of the FICA tax and employees pay the other half. The employee contribution is 6.2 percent for Social Security and 1.45 percent for Medicare on wages up to $110,100. The temporary payroll tax cut for tax years 2011 and 2012 reduced the employee portion for Social Security by 2 percent.
USFederalSocialInsuranceTaxShareByIncomeLevel....
USFederalSocialInsuranceTaxShareByIncomeLevel.1979-2007 (Photo credit: Wikipedia)
2. Self-employment tax: A Social Security and Medicare tax for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. The self-employment tax consists of two parts: 12.4 percent for Social Security and 2.9 percent for Medicare (hospital insurance) on income up to $110,100. However, the temporary payroll tax cut for tax years 2011 and 2012 reduced self-employment tax by 2 percent. ...
USFederalTotalTaxShareByIncomeLevel.1979-2007
USFederalTotalTaxShareByIncomeLevel.1979-2007 (Photo credit: Wikipedia)
3. Alternative minimum tax (AMT): ... In essence, it is a flat tax with two brackets, 26 percent and 28 percent. The problem with AMT is that it now ensnares not only the wealthiest Americans, but 4 million to 5 million taxpayers with annual incomes between $200,000 and $1 million. Congress has yet to approve a new inflation "patch" that would allow millions to escape AMT (the last patch expired in December). If a new one is not enacted, the AMT will hit 31 million taxpayers this year, reaching deeply into the middle class.
Share of federal excise taxes paid by US house...
Share of federal excise taxes paid by US households reporting different income levels, 1979-2007 (Photo credit: Wikipedia)
The utility taxes that Americans pay can add up quickly, as do the so-called "sin taxes" on alcohol and tobacco products.
4. Electricity or natural gas tax: A tax collected by energy suppliers based on consumption during the billing period.
5. Cable tax: Tax imposed on cable television subscribers.
6. Landline phone tax: Federal and state tax associated with use of a fixed phone line.
7. Cellphone tax: Federal and state tax imposed on mobile telephone users.
8. Federal and state gasoline tax: A tax on every gallon of gasoline sold, which account for 11 percent of the cost of a gallon of gas, according to the Energy Information Administration. ...
9. Cigarette tax: The tax on cigarette use varies from state to state. New York City has the highest rate, ....
10. State alcohol tax: The tax imposed on the purchase of beer, wine and spirits varies state by state. The highest rate for spirits can be found in Washington and the highest for beer is Alaska. Wyoming has the lowest rate.
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Jill SchlesingerON TWITTER »
Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

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