In South Pasadena, California, 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 had explicit constitutional power to impose an income tax since 1916, with the passage of the 16th Amendment. This came after the Supreme Court had repeatedly found a federal income tax to be unconstitutional. States, including California, have always been free to impose whatever type of income tax they liked.

Everybody 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 South Pasadena, California if you aren't clear about what system your state has.

Income Tax Deductions in South Pasadena, California

A tax deduction is simply a reduction in the portion of a person's income which is taxable. For example, if someone makes ,000 per year, and gets a ,000 tax deduction, their taxable income is ,000.

This should not be conflated with a tax credit, which is a reduction in one's tax bill. A tax credit normally results in a greater reduction in tax liability than a deduction in the same amount.

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

How Can A South Pasadena, California Tax Attorney Help?

Income tax laws can get quite complex, especially when large amounts of money from multiple sources are involved. It would not be a bad idea to call a South Pasadena, California tax attorney to avoid the consequences of under-paying, and to prevent you from over-paying.