In Pasadena, California, an income tax is imposed on a certain percentage of the income of all individuals and businesses. Typically, income from all sources may be taxed. The federal government has had explicit constitutional authority to impose an income tax since 1916, with the passage of the 16th Amendment. This came after the Supreme Court had consistently found a federal income tax to be unconstitutional. States, including California, have always been allowed to impose whatever type of income tax they liked.
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 Pasadena, California if you aren't clear about what system your state has.
Income Tax Deductions in Pasadena, California
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 ,000 in a year, and the tax rate is 10%, a reduction of ,000 results in only ,000 being taxed. This means that you will pay ,900 instead of ,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 reduction of the same amount.
Many common expenses in Pasadena 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 Pasadena, California 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 Pasadena, California tax lawyer to avoid the consequences of under-paying, and to prevent you from over-paying.