In Ellicott City, Maryland, 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 has had the constitutional power to impose an income tax since 1916, since the passage of the 16th Amendment. Before then, states could, and still can, impose whatever income tax they like, including in Maryland.
Everybody 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 reside. Some states have no income tax at all. You should speak with an accountant or tax attorney in Ellicott City, Maryland if you don't know what the tax system is here.
Income Tax Deductions in Ellicott City, Maryland
A tax deduction is a reduction in the portion of a person's income that is taxable, resulting in a lower tax liability. For example, suppose your income tax rate is 10%, and you had ,000 in income last year. If you got a ,000 tax deduction, your taxable income would be ,000, and you would have to pay 10% on that. So, it would reduce your tax liability from to .
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 normally reduces your tax bill more than a deduction of the same amount.
Under federal law, many expenses in Ellicott City are tax-deductible, including interest paid on a mortgage, charitable contributions, the cost of tax advice, and union or professional dues, among many others.
How Can A Ellicott City, Maryland Tax Attorney Help?
Income tax law can get fairly complex in Ellicott City, Maryland. If you have any questions about your income tax liability, you should not hesitate to speak with a tax attorney sooner, rather than later.