Understanding Tax and other outgoings - Texas
 

As the title says really :)

We have the opportunity to move to the States as GC holders. We are looking at possibility of appling for EB1 Visa (many of husbands collegues in similar technical field to him have recently been through this process)

Husbands job means that we could now be looking at Texas (Plano area). We are also looking at San Fran and Chicago area although may need to rule out California due to higher cost of living.

So at the moment I am trying to get my head around likely outgoings and cost of living as we don't want to even start on the lengthy and costly EB1 process until we have a much clearer idea of cost of living.

We know the ball park figure for salary (approx 130,000 to 150,000). This is based on current job openings with the main employers in the area.

Would anyone be able to kindly help us fill in some 'gaps' on the assumpion that we would move to the state of Texas? Particularly Tax and Healthcare?

We have been told that prospective employer will have 'very generous' healthcare package but whether that is just for my husband or whether it includes all of us - I don't know so I think we need to assume 'worse case scenario'. It is impossible to know the details until he applies for a job and he won't be applying for a job until we have the visa but we won't apply for a visa unless we know we can afford to live on the 'typical' salary (so massive chicken and egg situation :))

Have already worked out budgets for rent, college fees and grocery shopping

But ball park figures still needed for:

Health Care for 6 of us? Lets assume worse case scenario!
Tax deductions - (we have 4 children if this makes a difference?)
Car rental and Insurance for 2 cars?
Electricty? - expecting to be high in Texas due to A/C
Cable TV?
Mobile phone contracts for all 6 of us?
Home Insurance?

Really appreciate if anyone can share their experiences.

Anything else we have forgotton?

Re: Understanding Tax and other outgoings - Texas
 

Hi, just wanted to answer a couple of things.
Electricity will depend on what size house you live in.
We live in a large house with very high ceilings and therefore our electricity bill is high. We average $300 per month.

I wouldn't even consider a job that doesn't include health insurance for all of you (and a good job would do) but even with good health insurance you are probably looking at a $25 per visit co pay and usually about a $2000 a $3000 per year deductible.
You would also want dental insurance and possibly optical insurance as well as prescription insurance. A decent job with a decent company "should" offer you this. Even with this my son's recent visit to the ER cost us $1,000.

Car rental, take a look at avis, enterprise etc. Once you've lived in TX for 90days you'll need to get your TX license.

Water in TX can be very expensive depending if you're on your own well or on
city water, so something to think about when house hunting.

Re: Understanding Tax and other outgoings - Texas
 

Thank you Lisa, that is really helpful.

Can I just clarify regarding the Health Insurance deductible - is that $2-3000 per year/per family or is it 'per person' - in other words should we multiply that figure by 6?

Any estimate on Tax deductions for Texas - have tried looking it all up on Wiki and looked at online calculators but it is very confusing. How do we calculate State Tax and Federal Tax deductions - any other taxes?

Re: Understanding Tax and other outgoings - Texas
 

IIRC, Texas has no state income tax... and federal tax would be the same regardless of where you live in the US.

Ian

Re: Understanding Tax and other outgoings - Texas
 

Texas piles the cost of local government onto property tax.

Re: Understanding Tax and other outgoings - Texas
 

That deductible is per year per family (we have 4 in ours)
As Fatbrit has said, property tax can be high, again depending on where you live, size of property etc.
We live in a 4,000 sq. Ft house on 2 acres in an excellent school district so our property tax is about $1,000 per month :ohmy:

Re: Understanding Tax and other outgoings - Texas
 

Thanks Lisa, I am guessing that still applies for rented property?

So the Tax Calculators are saying Fed Tax at approx 21%

If only my husband were working, I guess he would file as 'Married Filing Seperately?'

Then if I start working we would file jointly? Is this more tax effective?

Can anyone explain what 'Federal Allowances' are? Is this connected to how many children you have - Google has been next to useless.

Will there also be a City Tax? Or is this the same as Property Tax?

Just off to put roast in oven, will be back soon :)

Re: Understanding Tax and other outgoings - Texas
 

You will quickly learn to use a tax program to do your taxes.

When you've entered your stuff, it'll calculate the best way to file for your circumstances.

Re: Understanding Tax and other outgoings - Texas
 

As far as I'm aware our property tax includes "city" tax.
We live out in the sticks so don't pay for city water or sewage but do pay extra for refuse collection ($14 per month) Because we have our own Sceptic system we have to, by law, have it checked 4 times a year which I think costs us $250 a year.

Re: Understanding Tax and other outgoings - Texas
 

Property taxes are paid by the landlord so whatever the rent is, that is all you have to pay other than possibly utilities.

You would normally be filing married filing jointly whether or not you work. Usually the only time you would file married filing separately would be if you both worked and the total tax owed filing that way was less than the tax owed when filing jointly.

There are an array of tax deductions and tax credits and some may or may not apply. As an example, if you were both working and had child care costs, you could possibly take a tax credit (reduction in taxes owed) of up to $3,000 per child but a maximum of $6,000 per family.

http://www.irs.gov/taxtopics/tc602.html

Because of the complexity of the US tax code, determining how much taxes should be withheld is not that simple. Each employee is required to fill in a W-4 form to notify his/her employer of the amount of tax to withhold. The W-4 is used by the employer to calculate the amount of taxes that are to be withheld from each paycheck based on the employee making that same amount each pay period for the full year but is not used for bonuses, exercised stocks options, or other awards which are generally withheld at a fixed percentage rate. The W-4 also does not include taxes owed on unearned income. Therefore you could possibly change your W-4 several times per year to compensate for changes in your circumstances. Sometimes people change their W-4 to account for taxes owed on unearned income or can file quarterly estimated tax payments.

When both of you are working, each employer does not know how the spouse filled out their W-4 so therefore the each company basis the amount to withhold on the W-4 received from their own employee. Therefore when both are working, filling out the W-4 can become a major task especially if there will be tax credits and/or deductions claimed at the end of the year.

However by April 15th of the following year, you must file a tax return. If you owe the government less than $1,000, there will not be a penalty. If you owe the government more than $1,000, there may or may not be a penalty because there are several exceptions as to when a penalty is accessed and when it is not. If you over paid taxes, you will get a refund.

Re: Understanding Tax and other outgoings - Texas
 

Isn't property tax based on a percentage of value (or assessed value, or whatever)? That is, it isn't based on the square footage or land size ... although obviously the value is related to those factors.

Re: Understanding Tax and other outgoings - Texas
 

Just to add a few more things about taxes.

Besides income tax, there is the FICA (social security and medicare tax) that is paid. Normally that is 7.65% of income up to about $100,000 of income (changes each year with inflation). This year it is lower at 5.65% due to a tax break to stimulate the weak economy.

Deductions (reductions against income) are more complicated. First there is a standard deduction so unless you have deductions that exceed the standard deduction, it is not worth itemizing deductions. Deductions can include different taxes such as property taxes, state or sales taxes, car registration tax, etc. It can also include contributions to charities, out of pocket medical costs, unreimbursed business expenses, and many other types of deductions. Some deductions are not allowed until you exceed a percentage of your income while others can be taken immediately.

If you are self employed, those expenses are not deductions but are expenses on a different form and all business expenses are written off against income. When self employed, many expenses are allowed that would not be allowed if employed by a company. If you are self employed, you do not pay the FICA tax but pay a self employment tax instead which are FICA taxes paid by both the employer as well as the employee.

Alternate Minimum Tax (AMT) is a minimum tax that originally was meant to make sure that the rich paid at least some tax. However it was not inflation adjusted and therefore now can affect upper middle income families with large deductions and/or large long term capital gains. Basically what AMT does is reduce the amount of deductions (but not all deductions) and exemptions as your income climbs above a certain threshold and your tax is too low above that threshold. As an example, Romney had all his deductions eliminated (except the ones that aren't reduced) on $21 million of income giving him an effective tax rate of 13.9% including self employment tax.

Re: Understanding Tax and other outgoings - Texas
 

Yes, it is and as previously stated, as a large house on a couple of acres in a great school district our property is worth more than if it was smaller and/or in a different school district.

Re: Understanding Tax and other outgoings - Texas
 

Lisa, we would love to hear your thoughts on best Middle and High schools in the area? Not sure how old your children are?

Re: Understanding Tax and other outgoings - Texas
 

Cost of living is going to massively change depending on where abouts you're living....housing being the big one.

Healthcare will depend on employer, simple as that, so ask them. Can be anything from nothing to thousands a month.

Tax, depends entirely on if you own homes, salary and other income etc. IRS.gov is a good starting point and then state and possibly county/city taxes, but there are online tax calculators to give you ball parks.

Utilities will massively depend on where you live, age of building, size etc. Electric can be anything from $20-600 a month depending on all those factors, same for heating in the winter.

Cable/Phone/Internet, basic would be around $100 a month, can be skies the limit depending on what adds ons you get as a package, but $100-150 a month is a ball park for whatever service and provider.

Mobile phones, again, depends on where you live and what package you go for, but expect $50 a month, per phone at least.

No US credit history will be your biggest stumbling block, so you'll need to budget $50-600 as a deposit for everything, all the utilities...and if you end up not having to pay deposits you'll be doing well.

You say you've got kids, but not how old. Quality of schools you want to go to will also affect rental costs etc, because where they go will depend on the street you live in, so city-data.com is a good place for getting info on this. College, well out of state and possibly international fees, depending on state or private, can be anything from $10-100K a year, though generally $20-60K for most places for the tuition cost, then add in the living expenses etc.

Basically, a lot of the questions are covered in various levels of detail in past threads for a lot of the locations to get you started, the wiki is also a good starting point.

Re: Understanding Tax and other outgoings - Texas
 

Thank you Bob, all of your posts have been really helpful :)

Have posted on CityData and already had a couple of people reply that we would be comfortably off on that amount - but I am dubious!

We have twin daughters aged 16 who would probably be near college age if/when we arrive in the US so will be looking at college fees x 2 the minute we arrive. Sons aged 12 and 10 currently so estimating 14 and 12 when we arrive.

Another poster on a different thread has said to do 2 years in state community college first then last 2 years at Uni.

The next time someone in the UK whinges about Uni Fees I will be letting them know just how lucky they are compared to parents across the pond :)

Jobs appear to be in either California or Texas. Gradually starting to think that Texas would be better option as cost of living too high in Cali.

Right now we are just trying to work out if we could afford to live on $150,000 per year given the fact we are a large family with college fees to pay.

Re: Understanding Tax and other outgoings - Texas
 

Well the advantage of coming over on greencards would be the kids able to work while at college compared to if you came over on either H1/L1 visa's.

Another option would be for the eldest pair to stay in the UK for college, need 3 years residence in the UK to get local rates, which admittedly isn't a big difference with the new fees, but would make them eligible for the SLC for student loans and the big difference of not ha.ving to pay up front costs compared to international students.

Just something to consider, and kids going home to study is a valid reason for not abandoning US residency as long as they apply for the re-entry permit first

Re: Understanding Tax and other outgoings - Texas
 

Well it depends on where you're thinking of living. We live about 20 mins west of Fort Worth. There's a saying here that people can tell you're from Texas because you judge distances in how long it takes to drive there!
If you're thinking of heading to Fort Worth I can help you out.
There's a pretty good web site www.greatschools.net I think it is...take a look :)

Re: Understanding Tax and other outgoings - Texas
 

Are you fairly confident that you would be getting the same income in both CA and TX? Typically, salaries are significantly higher in CA, influenced by the higher cost of living. salary.com will give you some idea of differing levels.

My observations are that you get a good deal more $ in CA, but not enough to offset the higher cost of living (which really means, cost of housing). Also, not everything in CA is more expensive; assuming you are looking at coastal regions (eg, Bay Area), you can look forward to almost no a/c costs in the summer and only moderate heating in the winter. You would typically need a much smaller house in the Bay Area because the weather encourages you to go out more. In TX, you will form a very strong bond with your A/C!

'Quality' of living is also a big factor in CA - very outdoor-oriented lifestyle (the weather is extremely accommodating most of the year), and an awful lot to do and see - drive to Tahoe for skiing, visit Yosemite, drive down to LA for disneyland, drive along the coast highway (highway 1), pop up to the giant redwood forests, hike Mt. Tamalpais, enjoy a vast diversity of food (the Asian food is unbeatable), live in a multi-racial, liberal atmosphere, etc etc ... (which may not be your cup of tea, of course, but it is very different from Texas!).

But if the money on offer is really the same for both, you will be relatively rich in TX, poor in CA.

Re: Understanding Tax and other outgoings - Texas
 

glassdoor.com is another good site for the salary and company info.

Re: Understanding Tax and other outgoings - Texas
 

I would think so but you'll have to manage your funds well. Honestly it depends if it is long or short term. If you buy, you'll have a lot less spending money as the property tax is high (well in Houston it is - I'm not positive about Plato).
As a comparison:
I'm married, with a 4 month old and support both of my wife and son.
I earn towards the lower end of what you're talking about as a salary ($130k).
We own our house (4 bed detatched although in UK it would be classified as 5/6 bed due to game & media rooms).
We live comfortably but we don't have a massive amount of money throw around.
My healthcare is covered by my employer but my family's is not (circa $300/month).
Electricity ime runs $100/month (winter) to $350-400 in summer. Water can peak at $300/month (we have a 16k sqft lot which takes a fair amount of watering)
We drive modest cars (Hyundai's)
After standing bills (house, cars, insurance, student loan, utilities, health insurance) we have about $3.5k/month to include all food, entertaining, saving.

Hope that helps a little. Everyone's perception on quality of life and spending money required will vary. Like I said, we have no complaints about our quality of life but we also can't throw money around.

Re: Understanding Tax and other outgoings - Texas
 

Oh, and as an idea of income tax, my effective rate in Houston on $130k is somewhere around 18% (roll on submission of tax returns and refund from the IRS!!) even though I'm in the 25% bracket for married filing joint.
I'll just clarify that though as thats 18% on my taxable income (i.e. I've taken deductions for my wife and child as dependents and other allowable deductions for interest on mortgage etc). If you take my entire income and calculate tax as a percentage it's about 14.5%. YMMV though...

Re: Understanding Tax and other outgoings - Texas
 

I am going to guess here that what you mean is, your entire family is covered (as in, insured against events) by your employer-provided plan, but the cost of the family portion is not fully subsidized and thus you pay $300/month towards that.

This is quite typical. My company is (was ...) very small and did not have access to competitive plans, and thus could not offer good rates on family coverage. The average employee with family ended up having to pay $1,000 / month, vs. a single person getting full subsidy. Now that we've grown, we re-negotiated some deals and are able to offer better family coverage for only about $500/month.

Re: Understanding Tax and other outgoings - Texas
 

Yes, sorry I should have clarified it. You are correct, my healthcare is fully subsidized but the additional amount I pay covers my family on my plan. We're incredibly fortunate in that although we're only a small company, we have investment from a big company and get access to their healthcare plan which is considerably better than what we would otherwise get.

Re: Understanding Tax and other outgoings - Texas
 

One thing I'd mention is that if you have over $10,000 equivalent in money outside the United States (ie Bank/building society accounts in England), you need to file form TD F 90-22.1 and indicate how much money you have in
each account. This isn't part of your tax return but needs to be mailed by the 30th june each year to the treasury department. The penalties can be severe for not filing. Google search FBAR and look here:

http://www.irs.gov/businesses/small/...148849,00.html

Re: Understanding Tax and other outgoings - Texas
 

+100000000000000000000000000
I've fallen foul of this and was fined by the IRS. Heed this warning! They don't care if you don't know about it. It is only a reporting requirement - it's unlikely to create any additional tax unless you're doing something illegal in which case you have bigger problems...

Re: Understanding Tax and other outgoings - Texas
 

300 bucks - wow - thats steep! What you doing - bathing in it? Oh, wait......

We're out in Katy with a little bit larger lot (a touch over 20K) and the highest we paid in the last year was $83 for 36000 gals and I thought that was bad! have you got expensive water, or are you just using a hell of a lot of it? Are you sure you haven't got a leak somewhere?

Re: Understanding Tax and other outgoings - Texas
 

Health Care for 6 of us? Lets assume worse case scenario! I pay $83 per paycheck before taxes, which is 26 times per year, for health insurance for a family, which for me includes spouse and all children. That gets me very good coverage (in comparison to other plans) on medical, prescriptions, vision care and dental. ON top of that I pay about $200-$300 per year on co-payments for doctor visits and prescriptions etc

Tax deductions - (we have 4 children if this makes a difference?)children under 17 get you a $2000 tax credit per year, i.e. if the tax table said you owed $10000, each child would qualify you to get $2000 tax back

Car rental and Insurance for 2 cars?cars can be rented for as little $30 per day, but with 4 kids you'll be needing something bigger, so maybe 50-100 a day. look at companies called Enterprise, Alamo, National, Budget. Hertz and Avis are usually too exp.

Car insurance will be about $100 per month for 2 cars, but as a new arrival with no driving record it'' be higher for a while. Have proof of your driving record from UK

Electricty? - expecting to be high in Texas due to A/C$240 per month

Cable TV?don't get cable, get Directv 60-100 per month

Mobile phone contracts for all 6 of us? $180 per month on T-mobile gets 3 smartphones with unlimited data and text, and 700 shared talk minutes

Home Insurance? $500 per year but that's Arizona - no natural disasters like floods or tornados.

Re: Understanding Tax and other outgoings - Texas
 

We purchased 3 new smartphones on a family plan with TMobile in Nov 2011. We got unlimited data and text on all 3, and 2,000 shared talk minutes! $180 plus taxes and fees.

Rene

Re: Understanding Tax and other outgoings - Texas
 

Surely it will generate additional tax, since there will be interest or dividend payments on such money, which will count as income? Not worth worrying about from a financial perspective, but a big fat pain to have to report - probably some obscure form that one has no idea how to fill out, etc ...

I use the analogy of 'foreign tax credit'; some mutual funds I own invest a small amount in foreign countries, and pay a small amount of foreign tax. I'm allowed to take credit for that tax. The whole thing ends up saving me about $5 each year but takes me HOURS of research to find the right info to pop into the form.

Re: Understanding Tax and other outgoings - Texas
 

You're spot on there....I spent the last couple of years consolidating overseas accounts/assets to make reduce legwork at tax time - the biggest time saver was getting all my overseas shares into a US based E-trade Global account, so they effectively do all the legwork for me.