Income Tax in US.

[sharadaa]

Hello Friends,

I want to know about the income tax in US.
I will be greatful if anybody gives me full details.
I know it varies from state to state but I dont have the complete picture like how it will be calculated, there are two types of taxes it seems,whether there will be TDS, etc.,

Thanks
Sharadaa

[cncd1]

It is too complex for anyone to give you "full details." You will need to research based on your expected income and state. There are federal, social security, and state taxes based on income. At high income,it approaches 50% in high tax states; very low income, 10%; and moderately high, 35-40% in my state.

[sharadaa]

Hi Cncd1,

Thanks for the reply.
If I say my salary is $60k i.e., about $5k/month how much will go in the form of tax?
Do I need to pay the tax seperately or will it be deducted from the salary like our TDS here in India?

Pls try to explain however much you can. I need to plan my finances.

Thank You
Sharadaa

[RD_TS]

$5K/month.....you will get around $3.5K after tax.

All depends on, whether you are single or you have dependents

But, if you are paying more taxes per month, you will get a refund when you file taxes next year

[cncd1]

Income taxes are deducted automatically. The only problem arises if your company is in one state and you are based in another; sometimes the company withholds state taxes for their base and not the state in which you are working. You get around this by filing estimated taxes to your work state and have your employer eliminate his home state deduction.

This case is an issue because there is a penalty for failing to pay a significant portion of state taxes. Do note that there are several states that have no state income tax.

The IRS.gov site has the federal income tax forms and formula for 2007; the various states also have their tax forms online. You can work these out to give you a very accurate idea of your obligation. Just don't forget the social security (FICA) tax too.

Your biggest concern in planning will be your cost of housing. Look at a site called rent.net. Put in where you will be working to get an idea of apartment costs. With your salary, you need to pay less than $1200/month if you plan to have everything else covered. I personally would recommend less than $1000 because you need to account for transportation, insurance, utilities - which are increasing a lot this year, and food. Much depends on location; for example: my child's small, 1 bedroom apartment in large city on west coast (not San Francisco or LA) is nearly $1400/month while where he moved from he had a 2 bedroom townhouse for $800/month.

If you are single, many people share apartments; there are many 2 bedroom, two bathroom apartments designed for roommates. If you will be relocating often, leases are expensive to break so you need to look for places with short term leases that tend to be a little more expensive. It will be cheaper in the long run.

Unless you are in a very high cost of living area (New York, San Francisco), you should be OK. If you'll tell me where you expect to be, I can give you a better idea of what to expect.

[sharadaa]

Hi Cncd1,

Your reply was very informative thank you very much.

As of now I know only about my salary, I could be placed anywhere. One thing that I noticed is except for state tax which isn't much compared to other expenses, as you've said housing is a major concern the other expenses will be common in any part of US I guess.

What about this medicare tax do we get any sort of benefit from that?
We've to take health insurance isn't it?

Looking forward to your guidance.

Warm Regards
Sharadaa