In Iowa Falls, Iowa, 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 the constitutional power to tax income thanks to the 16th Amendment, which was enacted in 1916. Before that time, the U.S. Supreme Court had repeatedly declared the federal income tax unconstitutional, but individual states, including Iowa were free to impose an income tax if they saw fit.
While the federal government levies an income tax against every person and corporation in the U.S., the income taxes imposed by the states vary widely. Some states have relatively high income taxes, and a few have none at all. You should consult with an Iowa Falls, Iowa tax attorney if you don't know what type of tax system your state has.
Income Tax Deductions in Iowa Falls, Iowa
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 deduction of ,000 results in only ,000 being taxed. This means that you will pay ,900 instead of ,000.
There is also something called a tax credit, which is treated as a partial payment of the income tax. A tax credit almost always results in a lower tax bill than a deduction of the same amount.
Many common expenses in Iowa Falls can be deducted from your taxable income. They include mortgage interest, charitable donations (if property documented, of course), the cost of tax advice, union dues, and many others.
How Can A Iowa Falls, Iowa 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 an Iowa Falls, Iowa tax attorney to avoid the consequences of under-paying, and to prevent you from over-paying.