In Inver Grove Heights, Minnesota, 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 the constitutional power to tax income thanks to the 16th Amendment, which was enacted in 1916. Before that time, the U.S. Supreme Court had repeatedly declared the federal income tax unconstitutional, but individual states, including Minnesota were free to impose an income tax if they saw fit.
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 Inver Grove Heights, Minnesota if you don't know what the tax system is here.
Income Tax Deductions in Inver Grove Heights, Minnesota
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.
This should not be conflated with a tax credit, which is a reduction in one's tax bill. A tax credit usually results in a greater reduction in tax liability than a deduction in the same amount.
Many common expenses in Inver Grove Heights can be deducted, in whole or in part, from your taxable income. Federal tax deductions include charitable donations, union dues, interest paid on a mortgage, and state and local taxes.
How Can A Inver Grove Heights, Minnesota Tax Attorney Help?
Income tax laws in Inver Grove Heights, Minnesota can get fairly complex. You should speak with an accountant or tax lawyer if you have any questions about your income tax liability.