Goodlad

Hi all
Can someone explain the income tax system in USA .
I'm hoping to be making a move soon on a Sponsered transfer. My income will be around the $80,000 annual. I am confused as I've researched I would fall under the 25% bracket however when I visited various usa income tax caculator websites non of them would tax at 25%......
Can someone explain roughly what I would be taxed including Social Security.....
I would be married head of household with 2 kids as dependants...
Please help me to get. Better understanding
Thx

christmasoompa

You'll need to give your proposed location in order to get any meaningful advice, as tax rates vary by state.......

Goodlad

Hi thanks for reply....it would be in Texas ...Austin

Goodlad

My monthly gross would be $6750....
What kind of Federal Income taxes would be deducted and Social Security deductions?

Thx!

penguinsix

The US has a progressive taxation system, which means you are tax rates are based on the 'last dollar earned'. You first $1 is not taxed, but your $79,999 is taxed at 25% (or whatever the rate is). As such, it will never be 25% of 80k but an adjusted tax rate somewhat lower (your marginal tax rate).

The IRS just released the 'breakpoints' for when you jump between a rate:

IRS Announces 2014 Tax Brackets, Standard Deduction Amounts And More - Forbes

The money they "withhold" from your paycheque differs from "deductions" which is what you are able to take away from the income amount you pay taxes on. You get a "deduction", the government (done by the employer) "withholds" the taxes you owe.

The tax calculators give you a good idea in general of what to expect in your take home, but there are frequently minor little adjustments based on state and local income taxes (though not a problem in Texas). Anecdotally I never get a tax calculator to come out exactly the same as what I see in a paycheque but it's close enough for planning purposes.

penguinsix

I used this one with 2 deductions (your kids).

Salary Paycheck Calculator |Take Home Pay Calculator |ADP

Monthly Gross Pay
$6,666.67

Federal Withholding
$720.00

Social Security
$413.33

Medicare
$96.67

Texas Income Tax
$0.00


Net Pay
$5,436.67

Sally Redux

I think 'head of household' is different from 'married'.

Goodlad

Thanks for that...where did u enter 2 dependants on that site?

Goodlad

Oh so I'm married with wife and two kids aged 11 and 7 where would I come under?
Surely head of household...?

Sally Redux

I think married filing jointly - somebody more knowledgeable should be able to tell you for sure.

http://en.m.wikipedia.org/wiki/Head_of_Household

penguinsix

Head of Household sounds like it would apply, but it doesn't.

"Head of Household" is a status basically for a single parent who is raising a child (or dependent) without a partner. If you are married, you are not the head of the household (though in the 'English language' usage of the word, of course, you are, or more likely, your wife is :-)

Your filing status is likely married, filing jointly, with two kids. I say likely assuming your spouse is joining you on this trip and will be resident while you are resident (as compared to remaining in the UK for a few months to finish a project and possibly eligible to be a non-resident for tax purposes this year).

Head of Household -- What Does Filing As Head Of Household Mean For Your Taxes? - Forbes

Goodlad

Great advice!! In that case I'd be married jointly !! Any other help on this subject appreciated!,

Hotscot

I suggest you buy Turbo Tax and you can plug your numbers in. It's worth it when you file anyway.

Duncan Roberts

I suggest you just use the online version which is free until you submit.

Hotscot

There ye go then...