In Waterloo, Illinois, income tax is imposed on most sources of income that a person receives in a given year. Under federal, state, and most local laws income from all sources can be taxed. The federal government imposes an income tax on all persons and entities present in the United States. The power 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 free to impose income taxes as they saw fit.
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 Waterloo, Illinois if you aren't clear about what system your state has.
Income Tax Deductions in Waterloo, Illinois
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.
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.
Many common expenses in Waterloo 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 Waterloo, Illinois Tax Attorney Help?
Income tax law can get fairly complex in Waterloo, Illinois. If you have any questions about your income tax liability, you should not hesitate to speak with a tax Attorney sooner, rather than later.