In Rio Rancho, New Mexico, 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 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 New Mexico.
While the federal government levies an income tax against every person and corporation in the U.S., the income taxes imposed by the states vary widely. Some states have relatively high income taxes, and a few have none at all. You should consult with a Rio Rancho, New Mexico tax attorney if you don't know what type of tax system your state has.
Income Tax Deductions in Rio Rancho, New Mexico
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 deduction 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 simply a reduction in somebody's tax bill. A tax credit will typically reduce your tax liability far more than a tax deduction of the same amount.
Many common expenses in Rio Rancho can be deducted from your taxable income. They include mortgage interest, charitable donations (if property documented, of course), the cost of tax advice, union dues, and many others.
How Can A Rio Rancho, New Mexico Tax Attorney Help?
Income tax laws are notoriously complex. If you live in Rio Rancho, New Mexico and run into any type of tax problems, including an audit or wage garnishment, a local tax attorney would almost certainly be able to help.