In Chapel Hill, North Carolina, the income tax is a tax imposed on money received (income) during a given set time period. Under federal law, and the laws of most states, income from any source may be taxed. The federal government imposes an income tax on all persons and entities present in the United States. The authority to tax incomes was granted to the federal government in 1913 with the ratification of the 16th Amendment to the Constitution. Before that time, the Supreme Court had found a federal income tax unconstitutional, prompting the passage of the amendment. Of course, individual states, including North Carolina, were allowed to impose income taxes as they saw fit.
The federal income tax must be paid by everyone in the U.S. However, you must only pay the state income tax of the state you live in. You should talk with a financial adviser or tax Lawyer in Chapel Hill, North Carolina if you are not clear about what your state and federal tax liability.
Income Tax Deductions in Chapel Hill, North Carolina
A tax deduction is simply a reduction in the part of a person's income that is taxable. For example, if someone makes ,000 per year, and gets a ,000 tax deduction, their taxable income is ,000.
Don't confuse a tax deduction with a tax credit. A tax credit simply lowers your tax bill by the amount of the credit. A tax credit typically reduces your tax bill more than a reduction of the same amount.
Many common expenses in Chapel Hill can be deducted from your taxable income. They include mortgage interest, charitable contributions (if property documented, of course), the price of tax advice, union dues, and many others.
How Can A Chapel Hill, North Carolina Tax Attorney Help?
Income tax laws can get quite complex, particularly when large amounts of money from multiple sources are involved. It would not be a bad idea to call a Chapel Hill, North Carolina tax Lawyer to avoid the consequences of under-paying, and to prevent you from over-paying.