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Understanding Tax and other outgoings - Texas

Understanding Tax and other outgoings - Texas

Old Jan 29th 2012, 1:25 pm
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Default 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?
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Old Jan 29th 2012, 2:03 pm
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Default 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.
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Old Jan 29th 2012, 2:08 pm
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Default 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?
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Old Jan 29th 2012, 2:25 pm
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Default Re: Understanding Tax and other outgoings - Texas

Originally Posted by clarity1971 View Post
How do we calculate State Tax and Federal Tax deductions - any other taxes?
IIRC, Texas has no state income tax... and federal tax would be the same regardless of where you live in the US.

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Old Jan 29th 2012, 4:00 pm
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Default Re: Understanding Tax and other outgoings - Texas

Originally Posted by clarity1971 View Post
How do we calculate State Tax and Federal Tax deductions - any other taxes?
Texas piles the cost of local government onto property tax.
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Old Jan 29th 2012, 4:10 pm
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Default Re: Understanding Tax and other outgoings - Texas

Originally Posted by clarity1971 View Post
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?
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
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Old Jan 29th 2012, 4:44 pm
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Default 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
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Old Jan 29th 2012, 5:15 pm
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Default Re: Understanding Tax and other outgoings - Texas

Originally Posted by clarity1971 View Post
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
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.
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Old Jan 29th 2012, 5:23 pm
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Default Re: Understanding Tax and other outgoings - Texas

Originally Posted by clarity1971 View Post
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

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.
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Old Jan 29th 2012, 6:18 pm
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Default Re: Understanding Tax and other outgoings - Texas

Originally Posted by clarity1971 View Post
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
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.
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Old Jan 29th 2012, 6:36 pm
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Default Re: Understanding Tax and other outgoings - Texas

Originally Posted by lisa67 View Post
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
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.
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Old Jan 29th 2012, 6:56 pm
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Default 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.
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Old Jan 29th 2012, 8:56 pm
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Default Re: Understanding Tax and other outgoings - Texas

Originally Posted by Steerpike View Post
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.
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.
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Old Jan 29th 2012, 9:08 pm
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Default 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?
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Old Jan 29th 2012, 9:17 pm
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Default 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.
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