Personal Taxes

Check out the new Total Tax Insights Calculator from the AICPA

Last week the American Institute of Certified Public Accountants (“AICPA”) released a free online tool, Total Tax Insights, to help U.S. taxpayers get a picture of their total tax responsibility – federal, state and local – over the course of a year.  The AICPA wants users to have a better awareness of the need for financial and tax planning and the importance of considering the impact of taxes when making important financial decisions.  You can find this tax calculator at totaltaxinsights.org.  

I recommend that you give it a try.  It is easy to use.  Completing the input form takes only a few minutes.  You may want to have your most recent federal income tax return at hand when you fill out the input page.

The results of your efforts can be eye opening.  The calculator asks for the state and locality of your residence.  It uses your adjusted gross income as your “income” number and gives you estimated tax amounts for various taxes and the various estimates of tax as percentages of your income.  I could guess pretty closely my Federal income tax burden.  I was reminded of the burden of self-employment taxes.  I knew that I didn’t pay any state income taxes in Texas.  I was certain that I paid no cigarette taxes, which the software confirmed.  However, I was surprised at the number of different federal, state and local taxes and at the amounts of those taxes that my bride and I pay – federal and state cell phone taxes, federal and state landline taxes, hotel accommodations tax, cable tax, electricity tax, gasoline tax, to name just a few.

The sheer amount of taxes and percentage of my income devoted to paying taxes depressed me.  So, I went back to the Total Tax Insights calculator and compared what I would pay if I lived in New York City.  I would pay 21% more taxes if I lived there.  I feel better now.

Vance

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