In Daphne, Alabama, an income tax is imposed on a certain percentage of the income of all individuals and businesses. Generally, income from all sources may be taxed. The federal government has the authority to impose an income tax thanks to the 16th Amendment to the U.S. Constitution, enacted in 1916 after the Supreme Court had, on more than one occasion, found a federal income tax to be unconstitutional. Of course, before and after the creation of the federal income tax, states, including Alabama were allowed to impose income taxes of their own.
Everyone in the U.S. is subject to the federal income tax. But you are only subject to the income tax of the state in which you live. Some states have no income tax at all. You should speak with an accountant or tax lawyer in Daphne, Alabama if you don't know what the tax system is here.
Income Tax Deductions in Daphne, Alabama
A tax deduction is an expense which, in whole or in part, is subtracted from a person's taxable income. For example, if you make ,000 in a year, and the tax rate is 10%, a reduction of ,000 results in only ,000 being taxed. This means that you will pay ,900 instead of ,000.
This should not be conflated with a tax credit, which is a reduction in your tax bill. A tax credit usually results in a greater reduction in tax liability than a reduction in the same amount.
Under federal law, numerous expenses in Daphne are tax-deductible, including interest paid on a mortgage, charitable donations, the price of tax advice, and union or professional dues, among many others.
How Can A Daphne, Alabama Tax Attorney Help?
Income tax law can get fairly complex in Daphne, Alabama. If you have any questions about your income tax liability, you should not hesitate to speak with a tax lawyer sooner, rather than later.