FINANCES
5 WAYS TO PAY LESS IN TAXES
EVERYDAY TIPS ANYONE CAN USE BY DR. MICHAEL CASEY
M
any Americans cringe at the mention of taxes. We dislike taxes because we think we do not have a choice in paying them, or we are often left wondering where our money went. Good news! You may have more choices than you once thought.
TYPES OF TAXES
Taxes are required payments to local, state, or federal governments that include: • Sales taxes - charges added to the cost of goods and services. • Payroll taxes - employer deductions from your paycheck. • Capital gains - payments to the state and federal government as part of your annual tax return. • Property taxes – yearly payments on your house or car.
Some of the taxes you pay are used to do good. For example, federal taxes are used to pay for government services like health programs, the military, food assistance, education programs, housing assistance, and other programs. Property taxes can help fund schools, road improvements, and other local services. Payroll taxes are taken from your paycheck before you get it and sent on your behalf to the correct state or federal agency. The three required payroll taxes that most people pay are federal and state income taxes and FICA (Social Security and Medicare). The only way to pay less in payroll taxes is to make less money. However, you may be able to set up your activities as a small business and lower the tax bite.
FOLLOW THESE SIMPLE STEPS 2. BUY IT USED – You pay property taxes if you own
real estate (houses and land) and personal property (cars, boats, trailers, etc.). You can reduce the tax bite by driving an older car or truck. You can also appeal the tax assessor’s reported value of your home. You might not succeed, but it is worth trying. Consider buying quality items that are used, like furniture or electronics. If you buy from a private seller, they will not charge sales tax on the purchase. Check out Facebook Marketplace or Craigslist when you need something.
1. SHOP AROUND – The current Arkansas state
sales tax is 6.5% which is the fifth highest rate in the nation. However, each municipality or city can assess a local sales tax that is added to items you buy. For this reason, Arkansas has 397 different sales tax jurisdictions. One way to pay less sales tax is to buy your big-ticket items in lower-tax counties or cities. If the purchase is large enough, you may save several hundred dollars.
10 | ARKANSAS FLAVOR • FALL/WINTER 2024
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