Taxation question
#16
BE Enthusiast
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Joined: Aug 2015
Posts: 398
Re: Taxation question
Aye I'm starting to think more and more I might just get Turbo Tax and have it do it all for me!
#17
Re: Taxation question
The only annoyance for this past year is that I had to file by mail inorder to include a statement that I want to be treated as a tax resident all year.
#18
Re: Taxation question
Sorry for the double post - but whilst we're on the topic of taxes, PA has a state income tax of 3.07%, how is this paid? From my understanding you don't pay this on the federal tax returns, is that correct?
And the 3.07% - is that 3.07% of all earnings for the tax year?
And the 3.07% - is that 3.07% of all earnings for the tax year?
#19
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Joined: Aug 2015
Posts: 398
Re: Taxation question
You'll file a Federal tax return and a PA state return. The Federal will be a 1040 with a Schedule C for your business profits and a Schedule SE to work out the self employment tax you pay....that will be 15.3% of your profits......then you have to pay income tax on those too. The PA tax will be in addition to that. You'll be able to deduct things like healthcare costs and solo401k contributions can greatly reduce the income tax you pay.
#20
Re: Taxation question
And I'm correct in thinking that the self employment tax encompasses the Social Security tax and the Medicaid tax, but because I'm self employed - I'm paying both the employer and the employee contribution? But as stated earlier, on the 1040 you can deduct the employer contributions of the self employment tax?
FYI also look into making voluntary NI contributions
#22
Re: Taxation question
Yes - you can still pay in and get a UK state pension, and it's pretty good value. If you're young enough it is possible to pay additional NI and get a full UK state pension AND get enough US Social Security credits to get full US SS and escape WEP, .... which is what I think I can pull off.
#23
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Joined: Aug 2015
Posts: 398
Re: Taxation question
Yes - you can still pay in and get a UK state pension, and it's pretty good value. If you're young enough it is possible to pay additional NI and get a full UK state pension AND get enough US Social Security credits to get full US SS and escape WEP, .... which is what I think I can pull off.
#24
Re: Taxation question
Yes - you can still pay in and get a UK state pension, and it's pretty good value. If you're young enough it is possible to pay additional NI and get a full UK state pension AND get enough US Social Security credits to get full US SS and escape WEP, .... which is what I think I can pull off.
#25
Re: Taxation question
Then every one year of contributions (Class 2, £145/yr, for 2017, Class 3 £715/yr for 2018 and thereafter) your pension will increase by 1/35th of the UK pension.
#26
Re: Taxation question
Well you need to accrue 35 years, so a good starting point would be to get a report of how many years you already have. You can create an on-line account fairly easily if you have your British passport to hand (they verify your identity against data in your passport). There should be some "free" years between age 16 and you starting work.
Then every one year of contributions (Class 2, £145/yr, for 2017, Class 3 £715/yr for 2018 and thereafter) your pension will increase by 1/35th of the UK pension.
Then every one year of contributions (Class 2, £145/yr, for 2017, Class 3 £715/yr for 2018 and thereafter) your pension will increase by 1/35th of the UK pension.
#27
Re: Taxation question
Yes - you can still pay in and get a UK state pension, and it's pretty good value. If you're young enough it is possible to pay additional NI and get a full UK state pension AND get enough US Social Security credits to get full US SS and escape WEP, .... which is what I think I can pull off.
#30
Re: Taxation question
On the face of it that seems OK as if I stay living here and retire here then I will have 30 years.