The income tax in Stoughton, Wisconsin is a tax imposed on all of the income earned or received by a person or corporation during a certain year. Under federal law, almost any type of income may be taxed. The federal government has the authority 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 Wisconsin were allowed to impose income taxes of their own.
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 Stoughton, Wisconsin tax lawyer or accountant to find out if your state is one of them.
Income Tax Deductions in Stoughton, Wisconsin
A tax deduction is a reduction in the portion of a person's income that is taxable, resulting in a reduced tax liability. For example, suppose your income tax rate is 10%, and you had ,000 in income last year. If you received a ,000 tax deduction, your taxable income would be ,000, and you would have to pay 10% on that. So, it would lower your tax liability from to .
This should not be conflated with a tax credit, which is a reduction in your tax bill. A tax credit typically results in a greater reduction in tax liability than a reduction in the same amount.
Lots of expenses that are common in Stoughton are tax deductible. Federal tax deductions include mortgage interest, union dues, interest paid on mortgages, and others.
How Can A Stoughton, Wisconsin Tax Attorney Help?
Income tax laws can get very complex. If you are in Stoughton, Wisconsin and have any questions about your taxes, you should consult with an accountant or local tax lawyer to avoid tax problems, such as audit or wage garnishment.