No. 1 Anchorage, Alaska

Income tax: $0
Property tax: $2,572
Sales tax: $0
Auto tax: $165

STATE & LOCAL TAX BURDEN: 3.6%
(National median tax burden: 8.5%)

Urban Facts: Taxes? Residents of Anchorage actually receive an annual “dividend” payment derived from levies on state oil drilling operations.

In sheer geographic size, the city of Anchorage is larger than the state of Rhode Island. It is home to 42% of all Alaskan residents.

No. 2 Manchester, New Hampshire

Income tax: $0
Property tax: $2,349
Sales tax: $0
Auto tax: $493

STATE & LOCAL TAX BURDEN: 3.8%

Urban Facts: New Hampshire’s favorable tax structure and Manchester’s proximity to Boston makes it an attractive residence for flinty New Englanders.

No. 3 Cheyenne, Wyoming

Income tax: $0
Property tax: $1,326
Sales tax: $1,512
Auto tax: $665

STATE & LOCAL TAX BURDEN: 4.7%

Urban Facts: Levies on mining and oil account for nearly half of the Equality State’s tax revenues. Cheyenne is in close proximity to the geographical center of North America.

No. 4 Seattle, Washington

Income tax: $0
Property tax: $1,698
Sales tax: $1,561
Auto tax: $457

STATE & LOCAL TAX BURDEN: 5.0%

Urban Facts: Seattle may be a tax-friendly city, but it also has a high cost of living, well above the national average.

The median home sales price was $375,000 for last quarter of 2008, compared to $200,000 at the national level.

No. 5 Las Vegas, Nevada

Income tax: $0
Property tax: $2,251
Sales tax: $1,072
Auto tax: $486

STATE & LOCAL TAX BURDEN: 5.1%

Urban Facts: Gaming taxes account for 27% of the state’s general revenue funds.

The city’s rapid growth a few years ago that drew more than 5,000 new residents every month was propped up on subprime lending. Now Las Vegas has the highest foreclosure rate among U.S. cities.

No. 6 Jacksonville, Florida

Income tax: $0
Property tax: $2,456
Sales tax: $1,284
Auto tax: $195

STATE & LOCAL TAX BURDEN: 5.2%

Urban Facts: The state intangibles tax on certain investments was repealed in 2007.

Jacksonville is the third-most populous city on the East Coast, after New York City and Philadelphia. (Other cities such as Boston, Washington, D.C., and Miami have larger metropolitan area populations.)

No. 7 Sioux Falls, South Dakota

Income tax: $0
Property tax: $2,760
Sales tax: $1,518
Auto tax: $294

STATE & LOCAL TAX BURDEN: 6.1%

Urban Facts: In fiscal year 2007, lottery gaming put $110 million in the state till to provide a 30% property-tax relief.

Sioux Falls has the largest shopping center between Minneapolis and Denver.

No. 8 Phoenix, Arizona

Income tax: $1,241
Property tax: $1,401
Sales tax: $1,849
Auto tax: $588

STATE & LOCAL TAX BURDEN: 6.8%

Urban Facts: Tax information for Phoenix includes the entire metropolitan area which extends to cities of Scottsdale, Mesa, Tempe, Mesa, Chandler, Gilbert, Glendale and Peoria. But housing prices and local tax can vary significantly from locality to locality.

No. 9 Billings, Montana

Income tax: $2,559
Property tax: $1,865
Sales tax: $0
Auto tax: $689

STATE & LOCAL TAX BURDEN: 6.8%

Urban Facts: Billings taxpayers with adjusted gross incomes of less than $30,000 can exclude up to $3,600 of their pension income from state taxes.

Dubbed locally as the “Magic City,” Billings is supporting growth by dunning its energy, agriculture, and transportation industries.

No. 10 Chicago, Illinois

Income tax: $2,019
Property tax: $1,023
Sales tax: $1,624
Auto tax: $478

STATE & LOCAL TAX BURDEN: 6.9%

Urban Facts: Chicago’s effective real-estate tax rate of .70% and various exemption programs keep real property tax low. Just keep in mind that this surprisingly tax-friendly city doesn’t offer the same breaks for other cost-of-living expenses.

@IRSTax

Here, according to the IRS, are the 10 most common taxpayer mistakes:

Claiming the wrong filing status

Sorry, you can’t just choose to file single or married. Your marital status is determined as of Dec. 31. Anything before that date really doesn’t matter for tax purposes. You file either jointly or married filing separately. You may qualify for “head of household,” but you have to satisfy all the requirements. You don’t qualify just because you consider yourself the head of your household.Claiming the wrong status could kill your eligibility for the child tax credit, the earned-income credit and exemptions for dependents. Check out the instructions for Form 1040 for detailed information to help you select your correct filing status.

Omitting or using wrong Social Security numbers

The Social Security numbers you list for your dependents, the earned-income credit and the child tax credit must match your dependents’ Social Security cards. Otherwise, the IRS computers will reject your credits and deductions.If you’re still doing your return by hand, put down that stone tablet you’re reading and pay attention. Make sure your handwriting is legible, at least on your tax return. Although to be fair, I suspect that many of these mistakes attributed to taxpayer error actually result from bad inputting by the IRS.

Failing to use correct forms and schedules

Think of the IRS as a vast bureaucracy that responds to the dictates of an outdated computer system for audit direction. You don’t want to anger the computer gods.

If you file your employee business expenses on Schedule A without attaching Form 2106, the computer’s going to click. The more the computer clicks, the more likely that you will get audited.So, be nice to the computer. Correctly file all of the appropriate forms.

Failing to sign and date the return

This one is easy. If you don’t sign the return, you haven’t filed. Both spouses must sign a joint return. If you haven’t filed, you’re going to be subject to all kinds of penalties, not to mention interest on any amounts not paid in full.The only reason not to sign the return is if the numbers on it would constitute perjury. Do you think the IRS wouldn’t notice?

Claiming ineligible dependents

When the IRS started requiring Social Security numbers for claimed dependents, millions of dependents disappeared. I suspect most of them sulked back to their doghouses, flew to their bird cages or jumped back into their aquariums.In any case, the qualification criteria to claim a dependent are technical and very specific. With nontraditional families, there are the exceptions, the exclusions to the exceptions, the exceptions when the exclusions don’t apply and the special rules for the third Wednesday each month.

You’ll have to meet each of at least four qualifications. Follow the flowchart in the instructions for your Form 1040. But it’s not simple.

Misusing — or not using — the earned-income credit

This one I blame on Congress. It’s a provision to help the poorest in our nation, but lawmakers designed it to be one of the most convoluted provisions in our tax code.It’s so bad that the IRS reports failure to claim the earned-income credit as its No. 6 top taxpayer mistake and incorrectly claiming the credit as No. 7.

Lots of crooks — and unwitting but misinformed taxpayers — illegally claim the credit. Many of those whom the credit was designed to aid lack the tax sophistication or the dollars necessary to hire a professional to claim those dollars.

Losing receipts

Receipts can mean deductions and tax savings. So, hunt down all those charitable organizations to which you contributed and make them give you a receipt for the donation. If you made more than one donation, get a receipt for each one. The receipt needs the date, the amount, the name of the charity. No receipt means no deduction.We’re not done yet. Start hunting down receipts for medical expenses. Perhaps you spent enough on health care that your expenses exceed the 7.5% income threshold. The total expenses that exceed 7.5% of your adjusted gross income are deductible. And don’t forget: These can include health insurance premiums.

And don’t forget the paperwork to prove property tax and mortgage deductions.

Failing to report domestic workers

Even if you don’t want to be a Supreme Court justice or the U.S. attorney general, you still have to pay the payroll taxes on your nanny, housecleaner or in-home caregiver.Sorry, it’s the law. If you pay $1,500 or more in 2007 (or $1,600 in 2008) to any one household employee, you’re going to have to withhold, and match, both Social Security (6.2%) and Medicare (1.45%) taxes. You must file Schedule H to compute and report the liability.

You’ll owe federal unemployment taxes if you pay wages of $1,000 or more in any calendar quarter to household employees. You may also owe state employment and disability taxes.

If you pay certain related parties, or employees under age 18 who qualify, you may escape liability. See Publication 926 for details.

Failing to report all income

You can’t avoid reporting all of your income just because you don’t get a W-2 form or a 1099. Not all income is reported on 1099s. That doesn’t excuse you from having to pay tax on it. The fact that there’s no reporting to the IRS doesn’t prevent the agency from auditing your receipts and reconciling your bank deposits with your reported income.Unreported income can lead to civil and criminal sanctions. I don’t care how lucky you feel. The potential consequences aren’t worth the risk.

Failing to check for the alternative minimum tax

The AMT, or “awfully mean tax,” was created to catch high-income taxpayers who used allowable deductions and credits to wipe out too much tax liability. It’s an alternative computation of your tax, with different deductions, add-backs and flat rates.You pay the higher of your regular tax or that computed under the AMT.

Unfortunately, because it hasn’t been updated to reflect inflation since the original bill was passed, the AMT has been projected to hit about 19 million families in 2007, including 64% of households earning $100,000 to $200,000.

You might not think you’re a victim, at least until you get that letter from the IRS with penalties and interest. The IRS has an AMT estimation calculator on its Web site, but, to be sure, run through Form 6251.

MSN Money

@IRSTax

Do you have what it takes to self-file?

• Are you generally familiar with your tax situation? For example, do you know your filing status, understand what tax breaks (credits and deductions) you are eligible to claim and follow tax law changes enough to know what changes might affect you?
• Are you comfortable doing research if you encounter a tax question with which you’re not familiar?
• Are you organized? Do you keep good records to help you complete the forms?
• Do you prefer that no one else see your personal and financial details?

If you answered “yes” to these questions, doing your taxes yourself shouldn’t be too much of a problem.

Why you might want a tax pro

• You are intimidated by the whole tax-filing process.
• You don’t want to devote the time necessary to prepare your return.
• You’ve had a major change in your life that’s going to make filing more complex this year.
• You believe that by hiring a tax pro, you’ll save more than enough on your tax bill to cover the cost.

@IRSTax

Form 1040 is due April 17, 2012. The due date is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia.

@IRSTax

Truth in taxation. We’re so , so afraid of the IRS.

The Constitution says the Government can levy an income tax (see the Amendment) and the passing of the tax code gives them the mechinism to deduct it directly, when any income is earned. That section of the code says “when a return is required”. To determine that the government hast to return your money, you have to file a return where you do the calculations. So, you pay by law and file to prove you didn’t owe.

So are we liable for taxes or not? The answer lies in the 60,000 pages of Tax Code.

@IRSTax

If your pay from work involves compensation through tips, then the IRS would like you to be aware of a few facts about tip income. Here are four key points to keep in mind: 

1. Tips are taxable Tips are subject to federal income, Social Security and Medicare taxes.  The value of non-cash tips, such as tickets, passes or other items of value, is also considered income and subject to tax.

2. Include tips on your tax return You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip-splitting arrangement with fellow employees.

3. Report tips to your employer If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes. 

4. Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee’s Daily Record of Tips and Report to Employer, to record your tip income.

For more information see IRS Publication 531, Reporting Tip Income, and Publication 1244 which are available at www.irs.gov. Both can be ordered by calling 800-TAX-FORM (800-829-3676).