’Tis the season. Tax filing season, that is.
Between now and April 15, the work will continue to sort through records, do the math and fill out forms. According to one estimate, business taxpayers spend an average of 24 hours completing federal income tax returns — a total that includes record keeping, tax planning and form completion and submission.
As the cover story in this issue of the Business Times reports, there’s good news and bad about the present filing season. The good news: Federal tax reforms offer a 20 percent deduction on qualified business income. The bad news: The new regulations are anything but simple.
Income limits apply. Certain exceptions also apply to what are termed specific service trades or businesses — including those involved in accounting, consulting, financial services, health care and law — in which the principal asset of a business are the skills or reputations of the owners or employees.
Got all that?
Speaking of taxes, the Tax Foundation recently calculated state and local tax collections per capita for each of the 50 states and District of Columbia. Colorado ranks 22nd in collecting $4,621 in state and local taxes per capita.
New York ranks first in collecting $8,957, followed by Connecticut at $7,220, New Jersey at $6,709, North Dakota at $6,630 and Massachusetts at $6,469.
Among the states with the lowest tax collections per capita are Alabama at $3,206, Tennessee at $3,322, South Carolina at $3,435, Oklahoma at $3,458 and Florida at $3,478.
By the way, tax collections are the highest of all in Washington, D.C., at $10,841.
While some of the states rank high for tax collections because they impose higher rates, other results might be less intuitive. North Dakota, for example, generates a substantial share of its tax revenue from severance taxes on oil and natural gas, the burden of which is borne mainly by consumers outside the state.
Travel taxes — including hotel, car rental, and meal taxes — also disproportionately affect nonresidents. States that generate substantial amounts of tax revenue from tourism also could show tax collections per capita that are significantly higher than the actual tax burden borne by residents.
It’s something to ponder while you’re doing your taxes.