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Old 11-09-2010, 06:16 AM
2 posts, read 4,830 times
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We are looking into a relocation from Europe to MA, we have 2 children and are looking at areas such as Newton, Brookline, Wellesley and Needham.

Please can someone explain how we calculate taxes so that we are not overlooking anything. Is it done on area, schools etc? We will be renting a property to start with so what are we eligible to pay etc and how can we calculate this so we dont have any nasty surprises on arrival!

Many thanks!
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Old 11-09-2010, 08:49 AM
Location: Boston
1,082 posts, read 2,413,349 times
Reputation: 899
Taxes in the U.S. come primarily in three forms -- property, income, sales. If you are a renter, you won't directly pay a property tax, so the posted rent is the true cost. Since we can set that aside, you can contemplate only income and sales tax.

Sales tax:
This differs from state to state, and even within states. The state sets a floor, and some cities add an additional amount. The state income tax in Massachusetts is 6.25% of the sale price. In Boston and many other municipalities, there is an additional 0.25% making it 6.5%. Also something to note, it is not applied to all transactions. Many items like food, clothing, and alcohol are exempt from this tax. Check the following link for more information:

A Guide to Sales and Use Tax (http://www.mass.gov/?pageID=dorterminal&L=6&L0=Home&L1=Individuals+and +Families&L2=Personal+Income+Tax&L3=Forms+%26+Publ ications&L4=Publications&L5=Publications+Index&sid =Ador&b=terminalcontent&f=dor_publ_sales_use&csid= Ador - broken link)

Income Tax:
This is more complicated because there are both state and federal taxes applied to wages. The state tax is 5%, the federal tax is graduated and depends on your income. The top bracket is currently 36%. The vast majority of wage earners pay significantly less than this rate, and many pay no federal income tax at all. In addition to the income tax, there is also a payroll tax, which covers social insurance like retirement and some forms of health insurance. Payroll taxes are flat, but generally only apply to a certain amount of income, and not to any earnings beyond that level. Our system for taxing earnings is fairly complex, and I can't give you an answer regarding what you will pay without knowing a lot more about you and your expected salary. But you can find tax calculators on websites such as irs.gov which will give you a pretty good estimate.
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