In Lincolnwood, 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 Lincolnwood, Illinois if you don't know what the tax system is here.
Income Tax Deductions in Lincolnwood, Illinois
A tax deduction is simply a reduction in the part of a person's income that is taxable. For example, if someone makes ,000 per year, and gets a ,000 tax deduction, their taxable income is ,000.
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 typically reduces your tax bill more than a reduction of the same amount.
Many common expenses in Lincolnwood can be deducted, in whole or in part, from your taxable income. Federal tax deductions include charitable contributions, union dues, interest paid on a mortgage, and state and local taxes.
How Can A Lincolnwood, Illinois Tax Attorney Help?
Income tax laws in Lincolnwood, Illinois can get very complex. You should speak with an accountant or tax attorney if you have any questions about your income tax liability.