In Colorado, Arizona, an income tax is imposed on a certain percentage of the income of all individuals and businesses. Typically, income from all sources can be taxed. The federal government has the power 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 Arizona were free to impose income taxes of their own.
The federal income tax must be paid by everybody 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 Attorney in Colorado, Arizona if you are not clear about what your state and federal tax liability.
Income Tax Deductions in Colorado, Arizona
A tax deduction is a reduction in your 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 simply a reduction in somebody's tax bill. A tax credit will normally reduce your tax liability far more than a tax deduction of the same amount.
Lots of expenses that are common in Colorado are tax deductible. Federal tax deductions include mortgage interest, union dues, interest paid on mortgages, and others.
How Can A Colorado, Arizona Tax Attorney Help?
Income tax laws can get pretty complex. If you are in Colorado, Arizona and have any questions about your taxes, you should consult with an accountant or local tax Attorney to avoid tax problems, such as audit or wage garnishment.