In Prescott, Arkansas, an income tax is imposed on a certain percentage of the income of all individuals and businesses. Usually, 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.

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 Prescott, Arkansas if you are not clear about what your state and federal tax liability.

Income Tax Deductions in Prescott, Arkansas

A tax deduction is a reduction in your taxable income. It results in less of one's income being taxable, which causes a reduced tax liability.

This should not be confused with a tax credit, which is simply a reduction in somebody's tax bill. A tax credit will typically reduce your tax liability far more than a tax reduction of the same amount.

Lots of expenses that are common in Prescott are tax deductible. Federal tax deductions include mortgage interest, union dues, interest paid on mortgages, and others.

How Can A Prescott, Arkansas Tax Attorney Help?

Income tax laws are notoriously complex. If you reside in Prescott, Arkansas and run into any type of tax problems, including an audit or wage garnishment, a local tax lawyer would almost certainly be able to help.