Indian moving to bay area with family of 4 (Cupertino: 2013, apartment)

[reenamalhotra]

Hi,

I am looking for some advice.

My husband works for this big software MNC in India and has got an opportunity to work at their head quarters in bay area. They have offered annual base salary of $185k. We are planning to move in another 2-3 months time.

We are a family of 4 with 2 grown up kids. Our daughter will be going to 11 standard in coming academic year and son is in 5th. Since we will not be able to afford a private school and were looking for good public school districts, after some search, we have decided to take a rental 2 room apartment in Cupertino which might cost us $2600 - $2700 per month. We are hoping to keep 2 cars and make a small living. We are looking at staying in bay area for 6-7 years and don't have any plans to purchase house there.

In the offered salary, I guess we will need to pay separately for healthcare plans that company provides. We don't have much idea on how much these plans really cost and what really is the federal & state tax slabs are? We are made to understand that it might be a tax cut of 35% overall. I am suffering from a medical condition that rarely exist in India and quite common in US. Access to better healthcare is primary reason why we looking at this move. The medicine I am currently on may cost around $1500 per month in US. We are not sure whether with healthcare plans, we would pay slightly less for these specialty medicines.

Kids study is important goal for our family. Our daughter would need to enter a college in 2 years time. I understand college education is quite expensive in US. We are hoping to get through that with some study loan and some backup from our saving.

My question to the forum is whether we would be able to make a comfortable living with this kind of salary?

Thanks a lot!
Reena

[nagleepark]

Employer medical plans vary a lot. The monthly cost varies according to the number of doctors in-network, if out-of-network doctors are covered and a payment structure consisting of deductibles, copays and/or coinsurance. The employer and the employee share the cost: some employers pay the entire cost, some employers pay almost none of the cost and some employers share the cost with the employee more or less equally. It is all very complicated.

A tax rate of 35% is a good guess but it's hard to say. Income tax rates are marginal so you only pay 33% federal tax for the amount of your income over $183,250. Below that, you would pay 28% for $87,850 to $183,250. You would pay California income tax similarly up to 9.3%. You would also pay Social Security tax and other taxes. You would also have deductions which lowers your taxable income, even though you collect your full income. This is all very complicated, too.

Even so, your family should be fine on $185K/year.

[sezzam]

You should be able to get health insurance information from the employer. As nagleepark says healthcare plans vary quite a bit, but the premium you will pay for the entire family should be decent (due to the large group of employees at your husband's employer).

About taxes: See California Income Tax Rates and Tax Brackets, 2012-2013 to estimate federal and California taxes. Overall, your husband will pay Social Security, Medicare, Federal income tax, and State income tax on his wages.

Social Security: 6.2% of the first $113,700

Medicare: 1.45%

Federal and California income tax: Progressive rates (the tax calculator mentioned above shows the rates). You will be able to reduce the taxable Federal and California income by a Standard Deduction amount and by the amount of qualified 401K/IRA contributions. You may also qualify for other deductions (such as your relocation expenses).

[sezzam]

To clarify: Your family's income from interest, dividend, and capital gains will also be subject to Federal and California income tax.

Also, a US resident (even if temporarily resident as in your case) will need to report their world-wide income. Taxes might be due on income from a non-US country if the US does not have a tax treaty with that country. FYI, the US does have a tax treaty with India which essentially gives you US tax credit for income already taxed in India. (The rules are a bit more complex, but the simplification I have made is generally true.)

[floridaBound123]

You'll be fine on 185K! That is a lot of money. Especially if you plan to live in a smaller more modest living environment. Cupertino schools are known for being some of the best public schools in the South Bay, so you're on the right track there. As for medical insurance - it's difficult to say how much you'll have to pay. If your husband's employer provides it and it's a big company, I'm guessing you'll have a few options to choose from.

As an example, I work for a large tech company here in the bay area and they offer several options for health insurance. The options for me range from Kaiser Permanente insurance which would cost me $0 every month to Aetna POS insurance which is the most expensive. Kaiser is good insurance if you're healthy and have no issues. Aetna is good if you need flexibility in choosing your own doctors. I have Aetna and I pay ~$250 every month which my company deducts from my pay. This covers me, my husband, and our 4 children and includes Medical, Dental, Vision, and Prescriptions. We have a $15 copay that we pay anytime we see a doctor. The copay is more if we see an out-of-network doctor, but I've never had an issue with finding good docs in network. As for prescriptions, I typically pay $10 for generic prescriptions, and never more than $40 for non-generic. Vision is cool - I don't need glasses, but my plan allows me to put my benefit towards sunglasses so every year I get my eyes checked and then buy a pair of designer sunglasses for half the price! Dental is expensive if you have to have major work done. Mine covers my bi-annual check-ups, but if we have to have major work done (root canal, wisdom tooth pulled, fillings, etc..), insurance only pays a little bit and the rest is our responsibility. That's fairly typical for any dental insurance though.

Anyway, my example might be rare - not sure what other companies are offering their employees. Best way to find out is to talk to your husband's employer's Human Resources folks and find out what your options are. You may be surprised at how much companies offer. Medical insurance is a benefit so it will cost you less if your company offers it compared to if you had to go out and purchase it all on your own!

As for your daughter's college - does she make really good grades or play a sport? There are so many grants and scholarships and financial aid options out there for students who make good grades and also for student athletes. My son is graduating high school this year. He played volleyball since junior high and has been recruited to play for a college in Missouri (he also had offers from schools in Boston, Wisconsin, and Arizona). They're paying for half of his college tuition which is a huge help for us. His college also offers a work program where they provide him a job and the money he earns from that job goes towards paying for the remainder that he owes. He'll also be eligible for loans as are we as the parents. Another example, my husband was valedictorian of his high school class and a student athlete. He received a full-ride scholarship to a Big 10 school where he played basketball. He then received a scholarship from Pepperdine to attend law school - all because he made really good grades.

I think you have to be resourceful and be willing to do the investigative work to find the help you need in all of the areas you mentioned. The bay area is wonderful place to live - you're going to love it!

Good luck!