When filing you tax return, do business expenses just help to relieve federal tax responsbility, or is state tax responsbility included as well? Thanks!
2007-07-16 01:08:32 · 4 answers · asked by Jenn B 2 in Business & Finance ➔ Taxes ➔ United States
On state tax returns, your starting number for income tax calculations is the net income for corporations and partnerships (or your adjusted gross income for individuals) from your Federal tax return, where you have already taken deductions for business expenses.
From that number there may be some adjustments for items that are taxable on one return, but not the other, or other like adjustments. Tax is then calculated on the adjusted number for states. So, yes, business expenses help reduce both your Federal and State tax liabilities.
Hope this helps!!
2007-07-16 01:40:36 · answer #1 · answered by starlight_chic06 3 · 0⤊ 0⤋
Business expenses are used to determine your net income. Only your net income is subject to income tax at any level, Federal, State or Local.
2007-07-16 08:36:16 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Business expenses lower your net business income, which lowers both your federal and state tax.
2007-07-16 10:30:37 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
Both help to lower your taxes some. It just depends on what you can deduct. Talk to your tax person and they can help you out.
2007-07-16 08:12:08 · answer #4 · answered by Anonymous · 0⤊ 0⤋