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Income Tax Law Questions

In most cases right after the first of the year people are receiving their W-2s and are getting ready to prepare their income tax, but there are those that may not feel that they are required to do so. Often this triggers a set of ongoing questions like: is there a law that mandates paying income taxes? Are there income tax laws that specify how a person who lives in one state and works in another should be filed? These and questions like them have been answered below by the Experts.

Is it true there is no law to pay income tax?

This is not true in most cases, though there are many people out there that continue to claim that income taxes do not have to be paid and that making individuals pay income tax is unconstitional. Congress passed the Internal Revenue Code, in which the federal tax laws are contained. This is the law that lays out the requirements that people must pay income taxes.

If a self employed person has residences in multiple states and earns money in all those states how does the individual file their state income tax?

Since each state has a right to tax the income of an individual, the individual will have to file a tax return for each state that the money that was earned in and pay the taxes required. An individual who owns multiple residences will usually have one primary residence where they receive their mail and their driver’s license is issued by that state. An individual should first start with preparing a Federal Income tax return and then prepare state income tax returns for the other states in which income was earned, saving for last the state in which the individual has claimed their primary residence. After the other states income taxes have been filed and paid, the state in which the primary residence is located should be filed and the other states income tax may be taken credit for on the primary state’s income tax.

How do income taxes work for an individual who works in the international water all year?

Ships and aircraft that travel in international airspace or water do not fall under the classification of being in a foreign country. When it comes to income tax, if an individual were to have worked for, at the minimum, 330 days out of 12 months in consecution in waters under the domain of another government other that the United States, the individual would be eligible for an earned income credit. For an individual to meet the criteria to receive the earned income credit, according to federal income tax law, the individual would need to have been physically present in a foreign country for the set 330 days of 12 months, being in international waters is not considered being present in a foreign country.

Is there a income tax law federal or state, that mandates that a second home must be 100 miles from the primary residence, in the State of California?

In many cases, there is no federal or state income law that requires that an individual’s second home must be 100 miles from their primary residence. An individual is able receive the income tax deductions for property taxes and interest from their mortgage regardless of the mileage difference between the primary and secondary homes. Mortgage lenders may make this a rule in terms of the property being an investment or income property versus being a second home, and for this reason may stipulate that the secondary home must be 100 miles from the primary residence.

The Internal Revenue Code was passed by Congress, which states that income tax must be paid. The Internal Revenue Code even lays out what is considered to be income. If an individual has multiple homes in multiple states and makes earns an income in all of these states, then according to income tax law, they must pay the income taxes for each state on the income earned in that state. If an individual works in international waters they are not exempt from paying taxes on their income according to federal income tax law. If an individual has any questions regarding income tax law they are able to ask their questions to an Expert.
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