A guide to income tax planning in Virginia
Understanding taxes can sometimes be very complicated, but it’s part of being an American citizen. Virginia’s state income tax is not much different either. The tax system is both federal and state. At the federal level, taxes are the same in all 50 states. However, each state has its income tax calculation. Virginia’s income tax applies to many things: schools, recreation, parks, and public services are just a few. If you have packed your belongings with the help of professionals such as long distance movers Virginia, know that you will have a more favorable income tax law in Virginia. To understand how you will calculate income tax, this guide to income tax planning in Virginia will provide you with important information.
Total gross income
Any tax planning process begins with the calculation of your total gross income (GTI). This is the total income during the fiscal year from different sources of income:
- Wage income
- Property income
- Professional and business profits
- Capital gains
- Other income
Virginia is a no-estate tax state. However, there is a probate tax and it applies to estates worth more than $15,000. For a successful organized move, use one of the professional household or office moving services from All State Moving and Storage. You will have safely packed an efficient move.
Calculate net taxable income
The next step in Virginia income tax planning is to calculate your net taxable income (NTI). Various deductions under Chapter VIA and allowed under Section 80 of the Income Tax Act. This will reduce your taxable portion. Payment of health insurance premiums, investments in tax saving instruments, repayment of loans for higher education, and maintenance of a disabled person should also be taken into account. Donations are also taken into account to reduce tax liability. These are just a few of the items that can reduce your tax obligation. Using the tax reduction provisions effectively will help you save money in the long run.
Calculate your tax liability
The next step is to calculate your tax liability based on the current tax brackets. You can easily find the formula on the web as they differ from state to state, but if you live in Virginia and make $70,000 a year, you will be taxed at $12,100. The average tax rate is 11.98%. The marginal tax rate is 22%, which means that all your additional income will be calculated at that rate. So, if you think that you can manage to live in VA with these taxes, maybe it is time to contact the moving company in Virginia. They will make your move efficient with state-of-the-art equipment. While you are planning taxes, professionals can finish the most time-consuming part of the relocation for you.
Some facts about income tax planning in Virginia
Whether you are a resident or non-resident, the state of Virginia requires the payment of taxes if you have income from a source located in Virginia. State tax rates range from 2% to 5.75%. The general sales tax rate is 5.3%. Also, some of the tax credit benefits you can get from the state of Virginia include standard deductions, dependent care loan deductions, and itemized deductions. Virginia has a state sales tax of 5.3%. A lower tax rate of 2.5% applies to food and household consumption. In addition to the many tax benefits, there is a federal estate tax, but it primarily affects estates with high incomes. As long as your net worth is less than $12.6 million for individuals, you are exempt from federal estate tax.
Consider storage units to help your budget if moving to VA
A successful move is a well-organized move. Therefore, leave nothing to chance. With storage units Virginia you will have everything organized. One of the best things about storage units is that they are affordable. So, when you have to pay taxes, at least you can also save up. For example, instead of having a bigger residence with a room just for your belongings, which can be expensive, and you’ll pay more tax, you can rent a storage unit.
Before your move to Virginia or any state, knowing the tax system is crucial. Income tax planning in Virginia will help you be ready after the move, knowing how to plan and what to expect in terms of federal and state taxes.