There are dozens of different types of taxes. Some are taxed on income, others on personal property, and others on goods and services. Use our penalty and interest calculator to calculate what you may owe for certain types of taxes. A tax lien can affect your ability to get credit, including buying a house or car, or even obtaining a credit card.
Every time you don't pay the tax balance that appears on your federal income tax return in full before the due date, you create a tax debt. Self-employed people are responsible for the total 15.3 percent, although half of that amount can be deducted as a business deduction higher than the line on a person's income tax return. However, if the tax is based on incorrect tax information, you may be able to reduce, and even eliminate, the taxes due. To show that you meet the filing rules, you must have filed or filed an extension for all your tax returns; you cannot have an IRS application pending for a return you didn't file.
If you show the IRS that this is the first time you haven't paid taxes, you can request a reduction in tax-related penalties during a tax period. Wealth taxes can be sizeable, but less than a tenth of 1 percent of taxpayers have to pay them, which means that 99.9% of us don't have to worry about this. In fact, when you count all taxes (federal, state, and local income taxes (corporate and individual), property taxes, Social Security taxes, sales taxes, excise taxes, and others, Americans spend 29.2 percent of our income on taxes every year. Some believe that sales taxes are the most equitable form of taxation, since they are essentially voluntary and extract more money from those who consume more.
Unlike a tax lien, which represents a claim on your property if you don't pay your tax bill, a lien is the total seizure of your property to settle your tax debt. The total FICA taxes on individual workers represent 7.65 percent of income; 6.2 percent goes to finance the country's Social Security system, while 1.45 percent goes to Medicare. A tax related to wealth tax, and which is calculated in a similar way, is gift tax, which applies to the transfer of wealth during a person's lifetime. In most cases, income tax brackets are progressive, meaning that the higher the income, the higher the tax rate.
If you don't settle your tax debt and don't pay the IRS what you owe, the IRS may file a federal tax lien notice to protect your interests.