In Englewood, Colorado, an income tax is imposed on a certain percentage of the income of all individuals and businesses. Generally, 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 Colorado, have always been free to impose whatever type of income tax they liked.
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 Englewood, Colorado if you are not clear about what your state and federal tax liability.
Income Tax Deductions in Englewood, Colorado
A tax deduction is a reduction in the portion of a person's income that is taxable, resulting in a lower tax liability. For example, suppose your income tax rate is 10%, and you had ,000 in income last year. If you got a ,000 tax deduction, your taxable income would be ,000, and you would have to pay 10% on that. So, it would reduce your tax liability from to .
Don't confuse a tax deduction with a tax credit. A tax credit simply reduces your tax bill by the amount of the credit. A tax credit usually reduces your tax bill more than a deduction of the same amount.
Under federal law, many expenses in Englewood are tax-deductible, including interest paid on a mortgage, charitable contributions, the cost of tax advice, and union or professional dues, among many others.
How Can A Englewood, Colorado Tax Attorney Help?
Income tax law can get fairly complex in Englewood, Colorado. If you have any questions about your income tax liability, you should not hesitate to speak with a tax attorney sooner, rather than later.