The income tax in Red Oak, Texas 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 constitutional power to tax income thanks to the 16th Amendment, which was enacted in 1916. Before that time, the U.S. Supreme Court had repeatedly declared the federal income tax unconstitutional, but individual states, including Texas were free to impose an income tax if they saw fit.
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 Red Oak, Texas tax Attorney if you don't know what type of tax system your state has.
Income Tax Deductions in Red Oak, Texas
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 a reduction of a person's tax bill. A tax credit almost always results in a lower tax burden than a tax deduction of the same amount.
Many common expenses in Red Oak 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 Red Oak, Texas Tax Attorney Help?
Income tax laws are notoriously complex. If you live in Red Oak, Texas 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.