RandomlySet

Afternoon all.....

I'm currently in talks with a UK based company about a job which would see me relocate to NYC for their new offices there.

Now whilst I love America, particularly NYC, and would like to think I'm familiar with culture over there etc, what I'm still trying to figure out is actual "living".

Now from my understanding, a 401k is similar to a pension here in the UK. I also believe you have to do your own taxes at the end of the year (rather than having PAYE like we do in the UK). Oh, and then there's health cover etc etc

What else do I need to consider? How much are taxes? What is a good 401k?

Any help, or links would be great (Google gives me links that aren't as useful as I'd like - either that or I'm using bad search terms).

Rete

If you are living in NYC (and not in the 'burbs) I believe you need to add NYC taxes to the equation. Otherwise, it is federal and state taxes. Social security and medicare deductions. Sometimes there is a deduction for workman's compensation (depends on the company as some will pick it up in full). Healthcare. Again, most companies will make you pay part of the premiums and a few will pay in full.

Personally, I don't consider a 401K a pension but that is just me. A 401K allows you to decide how much you want to set aside before taxes from your paycheck for investment in the company's 401K investment plan. Some companies match your contribution, some will give a small amount, but many don't contribute anything. My firm didn't contribute but our profit sharing at the end of each fiscal year was put into the plan by the company. These funds are not taxes until you withdraw them. There is a penalty you need to pay the federal government if you withdraw any funds prior to age 59-1/2. If you leave the company, you can either roll it over into another retirement plan, withdraw it all with a penalty or sometimes they allow you to remain in the investment scheme.

Pulaski

US tax system is like a bad attempt at PAYE - you are required to pay some taxes every time you are paid but the system only works on an approximation. If you haven't paid enough at the end of the year you will get a bill, and unless the underpayment is less than $1,000, you will also get a penalty for late payment of the taxes you should have paid throughout the year. Most people seem to want to err on the side of overpayment and get a refund. Personally, I look at that as giving a zero interest loan to the government, and aim for as close to zero under/over as I can get.

There are tax calculators out there, but when others have asked questions about salary and taxes, my usual response is that for around $80,000-$150,000 you are going to lose about 30% to taxes, or a bit less in a zero income tax state. If you're on $200k you're looking at about 35%. The reported results of the income tax calculators are consistent with this rule of thumb.

RandomlySet

Thanks..... Also, what about "dectuables"? I've heard of these, but what is covered? And why can you claim these against taxes (I like to understand the reasoning behind things, along with what needs to be done - if that makes sense).

Rete

Assume you mean deductibles. Are you speaking of deductibles on your tax return? If so, I don't do a long form but use the standard deduction as I don't have enough deductibles in total to go over the standard deduction allowed by the federal and/or state of new York for a couple.

Off hand on your tax return, deductibles would be medical costs over x amount. This would include premiums paid, co-pays to doctors and hospitals, medicine, etc. You can also take off property real estate taxes (at least on the state). I don't own a home in a state where we pay real estate taxes ... lucky us. Charitable contributions, childcare costs, and I'm sure there are more. Have you d/l and read the 1040 tax instructions from the IRS? This will help you.

A good accountant would be able to steer you in the right direction to minimize your tax.

Best of luck to you.

RandomlySet

Yes, I meant deductibles....

Thank you

I'll take a look at that form. I guess that that is what I was after. Some sort of document to read.

Fortunately I have a friend in Baltimore who is from the UK so she may be able to explain things - particularly comparing US to UK terminology. Also I do know someone in NY State, so I'll be asking him for advise. (A friend of my partner)

Pulaski

A "deductible" is the American word for an "excess" on insurance, most commonly talked about for health insurance, but also applies to car and home insurance. You pay the first $x deductible, before the insurance pays anything.

A "deduction, is something you take from your gross income to reach the amount on which taxied is calculated. There are many things in the US which can be deducted, including but not confined to: pension and 401k contributions, mortage interest, local/state property taxes certain medical expenses (not insurance premiums), etc.

cautiousjon

It's worth noting that if you do decide that you want to come to the USA, and want to bring your partner with you, s/he will need to become your legally married spouse first, in order for her/him to qualify for a derivative visa.

Pulaski

That's not true (a B-2 "accompanying domestic partner" visa is a possibility), but if they're not married then the "partner" won't be able to work unless he/she qualifies independently for his/her own visa, e.g. through a transfer by his/her own employer.

Rete

From the instructions from Schedule C to 1040 return:

Examples of Medical and
Dental Payments You Can
Deduct
To the extent you weren't reimbursed,
you can deduct what you paid for:
Insurance premiums for medical
and dental care, including premiums for
qualified long-term care insurance contracts
as defined in Pub. 502.

cautiousjon

I am sorry. I should have been more clear by adding, "... and if your partner wants to work without first qualifying for his/her own visa..."

sir_eccles

Think of a 401k more like a shares ISA.

Regarding NYC "city taxes" I thought they applied if you lived or worked in the city.

mrken30

My 401k is pretty much the same as my UK pension. Primarily consisting of mutual funds. My 403b also has mutual funds but less choice. Both are considered deferred income vehicles.

In some instances you can withdraw from your 401k at age 55

http://moneyover55.about.com/od/401k...-at-Age-55.htm

Pulaski

I agree, I don't know what CJ is talking about, because my experience of 401k's is that they are indistinguishable from a "personal pension" in the UK. - You contribute before-tax money deducted directly from the payroll, and you get to choose from a very limited range of investment funds.

mrken30

I didn't realize there are 3 types of 401k. Looks like CJ was talking about Tiered Profit Sharing 401(k).
The traditional 401(k) is more common and is like a UK personal pension.

Forbes Welcome