In terms of transportation, it is more convenient for the commuters or anyone to have their personal car. But having a car is not as easy as you think. There are taxes that you need to pay. Tax for automobile in the United States varies on different states. Tax could also be different from the cities, municipalities and localities within the state. They are levies that are needed to pay just by the moment you purchase a new car, trade-in a car and even leasing a car. You have to pay for the registration tax and the sales tax. Depending on different states, others impose vehicle tax. There is also excise tax that is different from the registration tax. Some states charges for personal property tax. There is also a federal highway use tax, but do not apply to all vehicles during the tax period.
When you buy a new car, you have to pay for the registration tax as to where your home address is. The amount you pay for the sales tax depends on the state or the municipalities and localities within the state, where you purchase the car. Some states have larger percentage when it comes to sales tax. Some states like Illinois, if you registered your car in a not incorporated areas, they put county tax for the vehicles. In Massachusetts, aside from the registration fee, you also need to pay for the excise tax. This excise tax, which is an indirect tax, is charged separately from the registration fee. It has a fixed rate of 2.5 percent statewide by a 1980 law that is called Proposition 2 ½. Some others also have surcharges for every vehicle. One example for this is in Virginia. Personal property tax is imposed in the state of Virginia. Instead of paying the tax depending on the car’s value, this tax is based on the cars weight. This tax is collected every time you renew your registration. It is also different in some states like California and New Hampshire. In these states, the amount of tax you need to pay for registration depends on the current value of the car. If you purchase an old car, you will have to pay lower registration fee. However, for those with newer cars, they will have to pay large amount of registration fee. During the tax period, not all vehicles is required to pay, but only for the federal highway use tax. For vehicles with fifty-five thousand pounds in weight such as trucks and buses, they are required to pay. For vehicles that are only used for five thousand miles or less, they are exempted including the agricultural vehicles.
Paying taxes is already causes financial pain However, purchasing a car comes with responsibilities. Same goes to paying your taxes. If you can pay your taxes on time, you will not have any hassles. It becomes hassling if you do not pay taxes on time. You pay large amount of money for taxes, but it becomes larger if you do not pay on time. You will have tax penalties if you are not paying what is owed. If you do not pay the tax you owed, there is a 0.5 percent added monthly. If you failed to pay on time, it also means you are not paying the taxes you owed. For these two penalties, you will have to pay five percent of it in any given month. The maximum percentage for the penalty is twenty-five percent. You will also have penalty if you do not pay enough tax within the year. Worst is if you do not pay at all. There is also interest that is added to the overdue amount. We would not want this to happen. If you fail to pay, it will be more difficult to pay because the longer you fail to pay, the money you owe becomes bigger every month. In order for you to avoid these penalties, first thing you need to do is prepare for the money for you to be able to pay on time. You also have to pay the required amount. With this, you will have no worries for bigger amount of tax. Also, it becomes more hassle because you will have more filings to do afterwards. Best thing to avoid these penalties is to follow the rules of IRS and what it considers. IRS stands for Internal Revenue Service which is a bureau of the Department of Treasury.
The Internal Revenue Service has penalty handbook. This is useful and resourceful. This would help you know more about the penalty you committed, and you will know what to do with it. It is better to be knowledgeable enough for the automobile taxes for you to avoid fraud. Fraud is everywhere. You would not expect it sometimes. Having the knowledge about these taxes is very helpful especially when you move to different state because every state has different taxes to pay. It may be less or more. You will know if you have to pay more in this particular state or pay less.
Owning a car is like having a baby — It has maintenance and it comes with responsibility, as well as paying the automobile taxes. There may be times that you will not be able to pay the taxes, but instead of running away from the responsibility, talk to the Internal Revenue Service and they will give you details you need. But pay the taxes soon as you can to avoid these penalties. As we all know, it becomes more difficult to pay an owe it goes bigger and bigger every month. If you think you will not be able to stand these responsibilities, it is better to just commute and not buy a car. However, it will be more convenient if you own a car. So, you got to work hard for it. Basically, think first before you buy a car, if you can afford it and if you can also afford the taxes you need to pay every month — budget planning is the key.