In Parsippany, New Jersey, the income tax is a tax imposed on money received (income) during a given set time period. Under federal law, and the laws of most states, income from any source may be taxed. The federal government has had the constitutional authority 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 New Jersey.
While the federal income tax applies to everyone in the United States, the income taxes imposed by individual states vary widely, and some states have no income tax at all. You should consult with a Parsippany, New Jersey tax Lawyer or accountant to find out if your state is one of them.
Income Tax Deductions in Parsippany, New Jersey
A tax deduction is an expense which, in whole or in part, is subtracted from a person's taxable income. For example, if you make ,000 in a year, and the tax rate is 10%, a reduction of ,000 results in only ,000 being taxed. This means that you will pay ,900 instead of ,000.
This should not be confused with a tax credit, which is a reduction of a person's tax bill. A tax credit almost always results in a reduced tax burden than a tax reduction of the same amount.
Many common expenses in Parsippany can be deducted from your taxable income. They include mortgage interest, charitable contributions (if property documented, of course), the price of tax advice, union dues, and many others.
How Can A Parsippany, New Jersey Tax Attorney Help?
Income tax laws can get quite complex, particularly when large amounts of money from multiple sources are involved. It would not be a bad idea to call a Parsippany, New Jersey tax Lawyer to avoid the consequences of under-paying, and to prevent you from over-paying.