In Greenwood, Arkansas, 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 Arkansas 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 Greenwood, Arkansas if you aren't clear about what system your state has.
Income Tax Deductions in Greenwood, Arkansas
A tax deduction is a reduction in one's taxable income. For example, if a person makes ,000 per year, and receives a ,000 tax deduction, they will only have to pay taxes on the remaining ,000.
This should not be confused with a tax credit, which is a reduction of a person's tax bill. A tax credit almost always results in a reduced tax burden than a tax reduction of the same amount.
Many common expenses in Greenwood 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 Greenwood, Arkansas Tax Attorney Help?
Income tax laws in Greenwood, Arkansas can get very complex. You should speak with an accountant or tax Attorney if you have any questions about your income tax liability.