The income tax in Hot Springs, South Dakota 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 had explicit constitutional power to impose an income tax since 1916, with the passage of the 16th Amendment. This came after the Supreme Court had repeatedly found a federal income tax to be unconstitutional. States, including South Dakota, have always been free to impose whatever type of income tax they liked.
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 Hot Springs, South Dakota tax attorney or accountant to find out if your state is one of them.
Income Tax Deductions in Hot Springs, South Dakota
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 Hot Springs 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 Hot Springs, South Dakota Tax Attorney Help?
Income tax law can get fairly complex in Hot Springs, South Dakota. If you have any questions about your income tax liability, you should not hesitate to speak with a tax attorney sooner, rather than later.