Income Tax Lawyers in Troy, Alabama
In Troy, 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 United States must pay the federal income tax. However, you only have to pay the state income tax of the state in which you reside. You should speak with an accountant or tax lawyer in Troy, Alabama if you aren't clear about what system your state has.
You may have heard rumors that the income tax is unconstitutional, and one's requirement to pay the federal income tax can be argued in court. However, this position relies on fringe constitutional arguments which have never been adopted by any U.S. court. If you refuse to pay your federal income tax in Troy, Alabama, you will face criminal charges.
Income Tax Deductions in Troy, 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 $50,000 in a year, and the tax rate is 10%, a reduction of $1,000 results in only $49,000 being taxed. This means that you will pay $4,900 instead of $5,000.
This should not be confused with a tax credit, which is simply a reduction in somebody's tax bill. A tax credit will usually reduce your tax liability far more than a tax reduction of the same amount.
Many common expenses in Troy 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.
If one's state has an income tax, some or all of these expenses may be deductible from your state income tax. The exact nature and extent of any deductions will depend on the laws of Alabama.
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How Can A Troy, Alabama 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 Troy, Alabama tax lawyer to avoid the consequences of under-paying, and to prevent you from over-paying.