Three of the Most Hated Taxes

Taxes are something which most people, business owners and non-business owners alike, dread completing each year. Those receiving big refunds might look forward to tax time. Some taxes seem much more unfair than others. Below is a list of three types of taxes which are generally considered among the most hated because of how unfair they are perceived to be.

Phase-Out Rules

Tax breaks, such as Child Tax Credits and education credits as examples, are subject to phase-out rules. This means that for a specific number of years or at a specific income threshold, your eligibility is lowered. These phase-outs are often disguised as tax rate hikes.

Retirement Account Accumulation Taxes

Are you aware that you have pay taxes on retirement account distributions? When you receive a required minimum distribution (RMD), you must pay taxes on the amount distributed to you. Your first RMD should be at age 70 ½.

Generation-Skipping Transfer Tax (GSTT)

The GSTT tax is collected on gifts, trusts and other large transfers of money which occur between persons who are at least one generation apart. The federal tax rate for the GSTT is 40-percent on top of gift taxes on one transfer of money. Gift taxes are also 40-percent. There are several tricky rules which require the assistance of a financial expert to decipher.

Final Thoughts

It is important to view updated tax laws regarding these three most hated taxes as regulations can change from tax year to tax year. Your tax preparation specialist should have the most updated information available on these taxes and what it could mean for your individual tax situation. Make sure that all of the information supplied to hired preparers is correct and up-to-date.

Image credit: Chris Potter