The income tax in Lancaster, Pennsylvania is a tax imposed on all money earned and received during the year. Under federal law, 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 Pennsylvania were free to impose income taxes of their own.
While the federal income tax applies to everybody 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 Lancaster, Pennsylvania tax Attorney or accountant to find out if your state is one of them.
Income Tax Deductions in Lancaster, Pennsylvania
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.
There is also something called a tax credit, which is treated as a partial payment of the income tax. A tax credit almost always results in a lower tax bill than a deduction of the same amount.
Many common expenses in Lancaster 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 Lancaster, Pennsylvania 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 Lancaster, Pennsylvania tax Attorney to avoid the consequences of under-paying, and to prevent you from over-paying.