whatever

In the UK and parts of Europe it seems like the option to take a company car is quite a common offering - particularly with office positions. If a car is not an option, quite often travel expenses are. Is this the case in the States?

Patrick

It is not unheard of, but it is very uncommon. The thing you must remember is that if you use your car for work (not to and from work obviously) then you can write of a percentage of your car payments, up keep and gas in your taxes every year. So it is more advantages to you to use your own car rather than a company one.

Patrick

Yosser

Proberly not, unless your the CEO of southwestern bell or alike!

Its a good question though....when I was searching for jobs I never came across a job ad that had a company car included in the package, all they offer here is medical insurance and 401K (pension).

Also since the economy went down the crapper most companys do not even have relocation packages anymore, so its more of a "if ya want the job....get yer arse over here on yer own expense mate!".

whatever

Oh that's pretty cool as our work usually has us travelling quite a bit seeing clients Mon-Fri... I have a lot to learn about how the taxes work over there.

whatever

Hmph! That's the impression I was getting from the little bit of looking I've done.
BTW is having a 401K pension a really good thing to have or are you just as well off getting your own private pension?

Manc

I aliken it to this.

Petrol is ****ing expensive in UK, hence companies offer cars and expense petrol accounts as incentives to employess.

Health insurance is ****ing expensive in USA, hence companies offers health insurance as incentives to employees.


there's your explanation.

Yosser

Lovely way of putting it manc....thank you

Manc

If your company offers to match a certain contribution to a 401k take advantage of it as it is basically free money. With compound interest, that free money is worth a few bob in your retirement years.
I always advise people to have a back up plan like growth stock mutual funds or Roth IRA's as a private thing.

The enron fiasco ****ed a lot of people up, because the enron pensions were not diversified and therefore plummeted like a whore's knickers.

Yosser

My present company does not offer 401K, its a shame because I think its worth it. The last company I worked for would match my contribution 100%.....I.E if 4% of my weekly wage would be deducted for 401K then the company would match it, some places offer only 25%, 50% etc, but atleast its something.

I guess I need to think about saving for a private pension, I only have 35 years to go

Yosser

By the way I cashed in the 2 years worth of 401K that I had saved, bad move they taxed me through the arse......bastards!

Taffyles

My hubby has company car and all running expenses paid, plus they pay my car payment - big benefit here as you're not penalised tax-wise like you are in UK for a company car. But company cars aren't as common here. We get full health (and get this our coverage is over $800 a month this year!!).
But hubby doesn't get 401K. I get 401k with my job and yes it is definitely worth it- you'd be crazy not to take full advantage of it if it's offered to you. Contibutions are taken out of your wage BEFORE tax- all packages differ, but I can contribute 10% of my wage and the company matches up to 4% of that- so its a no-brainer really.

If no 401K or other pension is offered by your company- take out a traditional IRA, you can contribute $3000 a year and get a big tax reduction on it (approx $1,200 back).

As for car expenses on your job- I think its only if you are self-employed isn't it Patrick, or if you need a vehicle to do your job? Commuting doesn't count, unless you have two jobs and then you can claim mileage to travel to the second job.

Yes- there is a lot to learn about taxes- its well worth paying to get your taxes done the first time you file.

Manc

I disagree.
lets presume the following figures.

If you over the course of your working life put $100K into you IRA by the time you are 59 1/2 you will have $1000,000

Now a traditional IRA means you pay tax on the way out instead of the way in.

Roth IRA you pay tax on the way in instead of the way out.

So a traditional IRA you will be taxed on $1000,000
Roth IRA you will have already been taxed on the $100,000 and the $1000,000 will be taxed on capital gains only, which will (IMO) be slowly phased out.

so what do you wanna be taxed on? $100K or $1M?


The gov't introduced the traditional IRA as a means on taxing people on their huge retirement amounts so they can reduce the expected SS shortfall in about 30 years.

it is a no brainer too.

whatever

Thanks Manc1976,
Marvellous advise...... and so graphic too

Yosser

**** me, you lost me now..so where do I go to get a IRA account set up?

Taffyles

The traditional IRA was designed for people who don't get 401K- they work in exactly the same way except that you obviously don't get employer contributions.
If you contribute to 401K you are not allowed to contribute to Traditional IRA- you can only take out a Roth.

If you have no 401K then it is better to take out a Traditional IRA- because of the tax benefits. Depending on how many years you contribute till retirement and individual circumstances- re-investing the tax refund from a Traditional IRA will substantially outperform the Roths even with the post-retirement tax benefits of the Roth (when you will be in a much lower tax bracket anyway). There are plenty of Traditonal V Roth calculators on the web to find out which is better for you- it all depends on your individual circumstances.

My hubby has no 401K, so he has a Traditional IRA and re-invests his refund in municipal bonds (tax-free). I have 401K, so I have a Roth IRA.