In Cape May, New Jersey, the income tax is a tax imposed on money received (income) during a certain set time period. Under federal law, and the laws of most states, income from any source can be taxed. The federal government has the power to impose an income tax thanks to the 16th Amendment to the U.S. Constitution, enacted in 1916 after the Supreme Court had, on more than one occasion, found a federal income tax to be unconstitutional. Of course, before and after the creation of the federal income tax, states, including New Jersey were free to impose income taxes of their own.
The federal income tax must be paid by everybody 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 Attorney in Cape May, New Jersey if you are not clear about what your state and federal tax liability.
Income Tax Deductions in Cape May, New Jersey
A tax deduction is a reduction in one's taxable income. It results in less of your income being taxable, which causes a lower tax liability.
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 typically reduces your tax bill more than a deduction of the same amount.
Under federal law, many expenses in Cape May 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 Cape May, New Jersey Tax Attorney Help?
Income tax laws can get quite complex, especially when large amounts of money from multiple sources are involved. It would not be a bad idea to call a Cape May, New Jersey tax Attorney to avoid the consequences of under-paying, and to prevent you from over-paying.