In Hoffman Estates, Illinois, income tax is imposed on most sources of income that a person receives in a certain year. Under federal, state, and most local laws income from all sources may be taxed. The federal government imposes an income tax on all persons and entities present in the United States. The authority to tax incomes was granted to the federal government in 1913 with the ratification of the 16th Amendment to the Constitution. Before that time, the Supreme Court had found a federal income tax unconstitutional, prompting the passage of the amendment. Of course, individual states, including Illinois, were allowed to impose income taxes as they saw fit.
Everyone in the U.S. is subject to the federal income tax. But you are only subject to the income tax of the state in which you live. Some states have no income tax at all. You should speak with an accountant or tax lawyer in Hoffman Estates, Illinois if you don't know what the tax system is here.
Income Tax Deductions in Hoffman Estates, Illinois
A tax deduction is a reduction in the portion of a person's income that is taxable, resulting in a reduced tax liability. For example, suppose your income tax rate is 10%, and you had ,000 in income last year. If you received a ,000 tax deduction, your taxable income would be ,000, and you would have to pay 10% on that. So, it would lower your tax liability from to .
Don't confuse a tax deduction with a tax credit. A tax credit simply lowers your tax bill by the amount of the credit. A tax credit normally reduces your tax bill more than a reduction of the same amount.
Many common expenses in Hoffman Estates 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 Hoffman Estates, Illinois Tax Attorney Help?
Income tax law can get fairly complex in Hoffman Estates, Illinois. If you have any questions about your income tax liability, you should not hesitate to speak with a tax lawyer sooner, rather than later.