Taxes

[Jimbits76]

Following the other thread I'm gonna come across as real dumb but how do you guys in the USA pay your taxes.

I remember being a kid watching US sitcoms and there was always some show when the characters had to run about searching for receipts and papers to put in their taxes...I even remember a Simpsons episode about Homer filing late.

So what gives?

In the UK if you're employed you are on PAYE in which the government deduct a percentage of our wage from our salary...gross wage to net wage.

We then pay tax on our investments or VAT on our purchases.

If a Brit is self employed he then has to file a self assessment to show profit/loss and spending to claim back the VAT spent on business "consumables" or expenses against the tax owed. This seems a little like the American way I've seen on TV.

Does everybody employed or self employed have to do a self assessment or get an accountant to work out their tax or do you have deductions from your salary on a weekly/monthly basis?

J

[Launch Mini]

Sure you don't care about Canada.
I tried to summarize our system, but it would be a book. (I'm an accountant)

People must report their world wide income here. Total of employment, self employment, investment income etc etc etc on a Jan - Dec basis. Taxes payable on the sum of the income, less deductions & expenses.

An employee has tax withheld at source, and this is reconciled when they file the tax return at the end of the year. Credit is give for taxes withheld.

Corporations pay tax on their net earnings. Profits can be allocated to employees (owners, etc) via wages. These are then added to the individuals income as above, but they are deductions for the company.

There are trusts, flow through's etc etc, but that is the basics

Sales taxes are charged by businesses on sales & services at various rates depending on the product & province. Some of these are refundable to other businesses, but individual consumers pay the full amount, no refunds.

[buz-lh]

Constantly. If you are an employee, taxes are withheld from each pay check. When you file your return if you have deductions, ie home mortgage, large medical expenses, etc they are used as an offset on your total taxable income. Not nearly the itemized deductions now as there used to be. Also, interest income, capital gains etc are taxed so you have to provide that info. Way too much bs. We need the Fair Tax in the USA now. If you are selfemployed it's a totally different ballgame as you have to file quarterly returns with estimated income and submit the tax payments at that time. At the end of the year when you file the actual return credit is given for the quarterly payments against your tax liability. If you haven't estimated enough the IRS can actually charge you penalties and interest. We need the Fair Tax in the USA now.

[Ashley]

Ugh, taxes. At least this is the first year ever where I only have one T4 slip to use! Woohoo!!

[Uncle-AJ]

You should be an expat, we don't pay taxes.

[JimSnyder]

Originally Posted by Jimbits76

Following the other thread I'm gonna come across as real dumb but how do you guys in the USA pay your taxes.

I remember being a kid watching US sitcoms and there was always some show when the characters had to run about searching for receipts and papers to put in their taxes...I even remember a Simpsons episode about Homer filing late.

So what gives?

In the UK if you're employed you are on PAYE in which the government deduct a percentage of our wage from our salary...gross wage to net wage.

We then pay tax on our investments or VAT on our purchases.

If a Brit is self employed he then has to file a self assessment to show profit/loss and spending to claim back the VAT spent on business "consumables" or expenses against the tax owed. This seems a little like the American way I've seen on TV.

Does everybody employed or self employed have to do a self assessment or get an accountant to work out their tax or do you have deductions from your salary on a weekly/monthly basis?

J

I don't want to talk about it can't we keep talking about Corndogs

[onkyo]

Originally Posted by buz-lh

Constantly. If you are an employee, taxes are withheld from each pay check. When you file your return if you have deductions, ie home mortgage, large medical expenses, etc they are used as an offset on your total taxable income. Not nearly the itemized deductions now as there used to be. Also, interest income, capital gains etc are taxed so you have to provide that info. Way too much bs. We need the Fair Tax in the USA now. If you are selfemployed it's a totally different ballgame as you have to file quarterly returns with estimated income and submit the tax payments at that time. At the end of the year when you file the actual return credit is given for the quarterly payments against your tax liability. If you haven't estimated enough the IRS can actually charge you penalties and interest. We need the Fair Tax in the USA now.

Can't agree with you more. I am self employed (own a business) with 10 full time employees. I have an accountant who helps me, but managing both my taxes and my employees taxes is a huge headache which I have to do every two weeks. Even while on vacation I have to be in touch with my accountant and near a computer to make online "deposits" to pay city, state, and federal taxes. If I am more than a few days late.... penalties, fees and interest tacked on. We absolutely NEED the Fair Tax without delay. Unfortunately, for us small business owners it will only get worse in the near future.

[Jimbits76]

We get taxed in brackets...the more you earn the higher the percentage of your wage...

First 10% is charged on your first £2440
Then 20% up to £37400
Then 40% over £37400

We get a personal allowance of about £6700 of our salary before we start paying tax (This must be like your deductions for mortgage etc).

Do you chaps in America and Canada pay a higher percentage of tax if you earn more money?

J

[2careless]

Go ask the Swedes. I think they pay more...

[Alcan]

Originally Posted by Jimbits76

Do you chaps in America and Canada pay a higher percentage of tax if you earn more money?J

Yep.

[Portzed]

Taxis are far too expensive here in Bristol too we need fair Taxis over here as well as you guys over there do IMHO

[unclesallie]

Originally Posted by Uncle-AJ

You should be an expat, we don't pay taxes.

Uncle AJ: thass the way to do it, money for nothin and the chicks for free!

[JJ Irani]

Originally Posted by Portzed

Taxis are far too expensive here in Bristol too we need fair Taxis over here as well as you guys over there do IMHO

[Launch Mini]

Tax rates in Canada
0 - 10,000 NOTHING
10 ~ 35k - 22%
35 ~ 70k - 31%
70 ~ 75k 33%
then in creeps up, until
over $130k 43.7%
These are marginal rates, so if you earn $150k , you don't pay 43.7 on the whole whack

[2careless]

Taxis, Taxes, or Texas? oh, titis?

[JJ Irani]

Originally Posted by Launch Mini

Tax rates in Canada
0 - 10,000 NOTHING
10 ~ 35k - 22%
35 ~ 70k - 31%
70 ~ 75k 33%
then in creeps up, until
over $130k 43.7%
These are marginal rates, so if you earn $150k , you don't pay 43.7 on the whole whack

Thanks, John......but that LAST bit is totally unfair!!

[toph]

Originally Posted by JJ Irani

Thanks, John......but that LAST bit is totally unfair!!

Thats why you start a company- even if you dont work for yourself (i.e Iran i& co) and put earnings throught that- take a wage , a dividend and a share of the profits. All taxed at less and more exemptions. Complicated but it is often done

[2careless]

FY 2008/09 AU Taxable Income / Tax on this income:

$0 – $6,000 Nil
$6,001 – $34,000 15c for each $1 over $6,000
$34,001 – $80,000 $4,200 plus 30c for each $1 over $34,000
$80,001 – $180,000 $18,000 plus 40c for each $1 over $80,000
$180,001 and over $58,000 plus 45c for each $1 over $180,000

extra 1.5% Medicare levy.

[2careless]

Originally Posted by toph

Thats why you start a company- even if you dont work for yourself (i.e Iran i& co) and put earnings throught that- take a wage , a dividend and a share of the profits. All taxed at less and more exemptions. Complicated but it is often done

When you come to Oz, do try this out and expect a tax audit

[JJ Irani]

Originally Posted by 2careless

FY 2008/09 AU Taxable Income / Tax on this income:

$0 – $6,000 Nil
$6,001 – $34,000 15c for each $1 over $6,000
$34,001 – $80,000 $4,200 plus 30c for each $1 over $34,000
$80,001 – $180,000 $18,000 plus 40c for each $1 over $80,000
$180,001 and over $58,000 plus 45c for each $1 over $180,000

extra 1.5% Medicare levy.

Good stuff, Kai. Hopefully, our new National Government will implement something new on similar lines.

Presently.....

19.5% on every damn dollar earned - $1 ~ $38,000!!

33% on every damn dollar over $38,001 ~ $60,000!!

39% on every dollar over $60,001 and beyond!!

JJ

[mopsey]

Get this, i remember when the top rate of income tax was, are you ready, 90%. Yes, nine zero.
In the dark days of old Labour.

[toph]

Originally Posted by 2careless

When you come to Oz, do try this out and expect a tax audit

its not illegal as everything is declared

[toph]

Originally Posted by mopsey

Get this, i remember when the top rate of income tax was, are you ready, 90%. Yes, nine zero.
In the dark days of old Labour.

I believe it was 98% in fact

[mopsey]

I did wonder if it was that but decided that it couldn't possibly be.

[Launch Mini]

Originally Posted by 2careless

Taxis, Taxes, or Texas? oh, titis?

I pick Titis

[2careless]

Originally Posted by toph

its not illegal as everything is declared

Yeah, the tax rules here are a bit different then. Say you team up with several mates to form a company. Each partner goes out to contract for a customer, you'll have to satisfy the tax office that this "contract" is not your prime income, i.e. you do contract out to multiple customers during the financial year otherwise those income are personal and not company counted. A few friends got caught out and they got a fine.

This is to make sure people won't "contract" themselves out to dodge all the payroll tax, workcare liability etc.

[toph]

I would agree on that one for sure but there are legal methods where you are not cheating the tax system only using it to your benefit. Mind you there are many tax implications that I am not aware of either