WEBEL LAW, PLLC
535 Fifth Avenue, Floor 4
New York, New York 10017
(646) 373-1055

1. Individual Income Taxes

Taxes are levied on the money people earn for wages, investments, or other income. The United States has a Federal Income Tax that U.S. citizens pay no matter where they reside and regardless of where their money was earned. It also applies to non-citizens for the monies earned in the United States.

Federal Income Taxes are collected in the U.S. by the government's collection agency, the Internal Revenue Service (IRS). If you've received a threatening letter from the IRS, they are after your money. Call us so we can discuss your situation. If you receive a telephone call, text message, or email from the IRS, IT'S A SCAM! DON'T GIVE THEM ANYTHING! BEWARE: IRS Collection Agents NEVER contact taxpayers by phone, text, or email. If you're unsure, call the IRS directly at (800) 829-1040.

Forty-one states also have a State Income Tax, which is levied on all incomes earned in their state regardless of the state of residence and on the income of residents of the state. Although most states have credit for taxes paid to another state, some people are taxed by two states on a single income earned.

Some municipalities, like New York City, also have an income, which drives the tax burden on New York City entities, residents, and employees even higher.

Generally, individual income taxes are paid on all wages, salaries, investments, and other forms of income earned. Most income tax schedules are progressive, which means that the lowest income earners pay little or no income tax, and the tax rates progress as individual or family incomes rise. Therefore, the highest-income earners pay substantially more in tax per dollar earned than the lowest earners. As a result, 50 percent of all income earners pay 97 percent of all income taxes. Generally, the policy is that those who earn the most can afford to pay more than the lowest-income earners. See our Tax Blog for a breakdown of United States Income Tax Rates based on income earned.

2. Corporate Income Taxes

The United States Federal and 44 states have a Corporate or Business Income Tax on certain business entities' income. Some local governments, like New York City, also have a Corporate Tax.

Certain business entities, including partnerships, S corporations, and Limited Liability Companies, don't pay Corporate Taxes directly. Instead, their income flows through to the people who own them and report earnings on their Income Tax forms.

Many governments, including the United States, have recently lowered their Corporate Tax Rate as an ecoomic stimulas. The theory is to let corporations retain more earnings, which they pass on lower prices, better wages, and additional investments into developing additional or better products and services, which will result in more taxes being paid in the long run. The other argument is that lowering Corporate Taxes passes the tax burden to individuals. The United States dropped the Corporate Tax rate from 30 percent to twenty-one percent as part of the Tax Cuts and Jobs Act of 2017.

3. Payroll Taxes

When employees in the United States receive their paychecks, their stub indicates that a portion was taken out for the Federal Insurance Contributions Act (FICA). Their employer matches the amount taken out. Together, these taxes are collected, at least in theory, to fund the United State's Social Security and Medicare programs.

Failure to pay Payroll Taxes is a serious tax problem and potentially a crime. The monies taken out of employees' paychecks are entrusted to the employer to pay to the IRS on behalf of the employee. Those payments are credited to each employee and help determine their monthly Social Security check amounts upon retirement. Failure to pay will result in a visit by an IRS agents to the employer. An IRS agent showing up at a business unannounced probably indicates a suspected crime is being investigated. That means it's probably time to lawyer up. Call us if you believe that you need legal representation for tax issues.

SUGGESTION: Business owners should personally write the checks to pay Payroll Taxes. Many owners have delegated this task to a "trusted" employee who failed to properly send the full amount due to the IRS. Some unscrupulous employees wrote the check for the correct amount but made the check payable to themselves. The business owner victims were still responsible for the full payment of the taxes. Furthermore, it's a good idea to verify that Payroll Tax payment checks are cashed by the IRS—instead of a person—by following up on each check after it's processed. Due diligence may save a lot of money and possibly time in jail.

Furthermore, we suggest that all checks be written with chemical solvent-resistant ink. Amateur scammers who steal business letters know how to chemically wash the "Pay To" name off intercepted checks and add their own. If the check is your Payroll Taxes, the check will clear, but the Internal Revenue Service won't receive your employees' Withheld money. But you're still liable for the tax payment even though you're out the stolen money. Don't let this happen to you and your business.

4. Capital Gains Taxes

The Capital Gains Tax is levied on the profit made on the sale of an investment, whether or not the asset was intended as an investment, including stocks, bonds, real estate, vehicles, jewelry, art, and more. The Capital Gains Tax Rate varies based on the time the asset was owned before being sold. For taxpayers below a certain income level (which varies each year), the Capital Gains Tax Rate is zero percent. For taxpayers above that income level, assets held less than one year, the Short Term Capital Gains rate is 20 percent earned, whereas the Long Term Capital Gains Tax rate of 15 percent of the profit applies to assets held a year or more. For most taxpayers who must pay Capital Gains Taxes, the tax rate is less than their ordinary Income Tax Rate.