In Kokomo, Indiana, 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 Indiana, were allowed to impose income taxes as they saw fit.
The federal income tax must be paid by everyone 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 Lawyer in Kokomo, Indiana if you are not clear about what your state and federal tax liability.
Income Tax Deductions in Kokomo, Indiana
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 normally reduces your tax bill more than a reduction of the same amount.
Many expenses in Kokomo are tax-deductible, such as interest paid on mortgages, charitable contributions, the cost of tax advice, and union dues, among others.
How Can A Kokomo, Indiana Tax Attorney Help?
Income tax laws can get very complex. If you are in Kokomo, Indiana and have any questions about your taxes, you should consult with an accountant or local tax Lawyer to avoid tax problems, such as audit or wage garnishment.