Income Tax Lawyers in Colorado, Arizona
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.
There are many rumors floating about which claim that you don't really have to pay a federal income tax. These "tax protestors" rely on the false notion that the income tax is unconstitutional, or otherwise invalid. This is based on some fairly bizarre interpretations of the constitution and tax code, and suffice it to say, none of them have had much legal success. You should know that if you don't pay your federal taxes in Colorado, Arizona, you will face criminal charges.
Income Tax Deductions in Colorado, Arizona
A tax deduction is a reduction in your taxable income. For example, if a person makes $50,000 per year, and receives a $2,000 tax deduction, they will only have to pay taxes on the remaining $48,000.
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.
If you live in a state that has an income tax, some of these expenses might also be deductible, though that depends on the individual tax laws of Arizona.
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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.