Basic deductions
 

Hi All

Just wondering what are the basic wage reductions in the US, we pay Tax at 40% and national insurance and thats about it lets pick a nice round figure say $5000 per month what would the reductions be physicall out is tax taken at source etc

Funny i am moving over but never thought about this before:eek:

Steve

Re: Basic deductions
 

The only givens are 6.2% for social security and 1.45% for medicare. The rest is going to depend on where you live (state and city tax) where you work (city tax) what you claim on your w-4 for federal tax, how much you opt to deduct for a 401k if available, how much medical benefits are (medical, dental, vision, prescription), how much voluntary life insurance might be, how much short term and long term disability might be, how much you put aside for an HSA or flex account plus others, I have parking deducted from mine for instance. Then that will all play into how much you owe or are owed at the end of the tax year when you figure out all your write-offs and how much tax you've paid for state, city and federal.

Welcome to the world of US paychecks and the tax system.

Re: Basic deductions
 

Don't forget, over here you also have to include what you pay for health insurance, co-pays and prescriptions.

Re: Basic deductions
 

Why is nothing ever straight forward:confused:

Thanks for the info

Steve

Re: Basic deductions
 

Something like this might help, once you know all your allowances and deductions: http://www.paycheckcity.com/netpayca...calculator.asp

Re: Basic deductions
 

the main thing that threw me when we came across is the US system is NOT PAYE like the UK. You have to guestimate the amount of tax you think you will need to pay and get your employer to withhold that amount from your salary each month. Then the tax is worked out properly by you/your accountant in January and you either pay the balance or get a refund.
Most people here seem to over estimate deliberatly and then recieve a tax refund once the bill is sorted preferring that to underpaying - as i dont think the IRS are very patient and want paying any deficit asap. You see adverts in the spring specifically talking about come spend your tax refund - its that common.

Other thing that phazed me out somewhat is that we had to do 4 tax returns last year. Federal, Ohio (state), city of husbands employment, city of actual living. THIS year we will have to do SIX!!! as we will have been living in three different cities in Ohio during the year ( we moved in Feb, and move again in November). Clearly you are only paying tax to one or the other at a time but its still a big PITA to do all the different returns.

Re: Basic deductions
 

This gives a rough estimate in either pounds or dollars.
http://us.thesalarycalculator.co.uk/salary.php

Re: Basic deductions
 

Add in the fact that you may be better of filing as single rather than married for state and/or federal and you can really stack up the returns.

Re: Basic deductions
 

Err... I think you mean "married filing separately" vs "married filing jointly". Married people can't file as "single".

Re: Basic deductions
 

Same thing, more words!

Re: Basic deductions
 

we did one of those seperate return thingies as the accountants seemed to think it was best. So therefore I didnt file anything at all as I have no income here. Is that the right thing to do or should you file a 'null' return?

Re: Basic deductions
 

No income equals no return, generally speaking. I suppose there could be instances where one needs proof they filed, even if they didn't work (but I don't know what those could be).

I tell you, if there's one think I don't miss about Ohio, it's the city/local taxes. That was an eye opener for me, when we moved from KY to OH. It almost seemed that every section/area of Cincinnati was incorporated so they could take your money for hte privilege of living there. Versus here, almost no areas of Louisville are incorporated, so you only wind up paying city tax and no local tax.

Of course in the small city we live in now, we pay no income taxes. The city gets their funds from property taxes. Thank God for that.

Re: Basic deductions
 

PAYE is a guesstimate too. The difference is in who does the guessing and the fact that for people with straightforward tax situations, the UK tax code makes such estimates likely to be much more accurate.

Re: Basic deductions
 

Definitely not the same thing. :)

Re: Basic deductions
 

Yeah it is, one goes off the married tax table, the other goes off the single tax table. Yes it's named differently and is technically a different code, but the table is the same for both and you would work out your tax the same!