Tips and Tools To Save On Common Taxes

Taxes are one thing in life that never go away, and any savings are often welcome, especially considering how quickly they add up. Many don't realize how much tax they're paying due in part to confusing bills and tax laws. I've compiled some common taxes, their true costs and some ways you can save to try and clear up some of the confusion. Some options are free and some aren't -- usage and cost-effectiveness really depends on your situation. I wanted to include them since they may be worth considering.

 

For starters, there's the Total Tax Insights calculator, which provides an estimate of the taxes you pay based on your situation. The Ask A CPA app allows you to get free answers to tax questions -- particularly useful for business taxes. The following are some common taxes:

 

Electricity or natural gas tax: This tax is collected by energy suppliers and is often hard to find and/or overlooked on bills. Some providers will offer incentives for improved energy efficiency along with other discounts, so it's worth asking.

 

Landline and cellphone tax: Federal, state and local taxes on phone use can be costly. For wireless service, the average consumer now pays over 17 percent in taxes and fees. A tool on the linked page can calculate your wireless tax cost.

 

Gasoline tax: According to the Energy Information Administration, federal and state taxes comprise 12 percent of the cost per gallon, with federal and state excise taxes per gallon at 18.4 cents and 23.52 cents, respectively. Additional county and city taxes can also impact the price of gas in some areas. Receipts from gas (and other) purchases can be tracked with services such as Shoeboxed and Expensify, which organize all expenses and allow import/export with popular accounting programs such as Quickbooks and Outright.

 

Cigarette tax: Cigarette taxes are higher than many realize. Georgia has one of the lowest rates but can still add up quickly. A breakdown of state tax rates (not including federal excise taxes) can be found here. Some are trying to reduce this cost with new electronic devices that don't use tobacco such as e-cigs, while others are making use of loose (pipe) tobacco which is taxed at lower rates than cigarettes according to a story in the New York Times. Health issues aren't going unnoticed, such as with e-cig maker Njoy having recently received venture funding and the development of more advanced and specialized vapor devices that use loose tobacco heated and turned into a smoke-free, chemical-free vapor (the linked site has a bit more detail on this technology).

 

Alcohol tax: As with cigarettes, taxes on beer, wine and spirits vary by state. According to a Tax Foundation report from Sept. 2010, the highest state excise tax rate for spirits is found in Washington, while Georgia is mid-range among the states. Additional local taxes can also apply. Various smartphone apps can be useful here.

 

Sales Tax: While this can overlap with some of the above taxes, tracking local sales tax rates is often useful. Software company Avalara offers a calculator for local rates based on one's address, which is more accurate than zip codes (see linked page). The U.S. has thousands of tax jurisdictions, so tools and services like these can be helpful.

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