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So I might be taking a job Kentucky which will involve me moving from England. I just wanted to know what mandatory deductions there are to your pay packet each month, for example, in the UK we have to pay income tax as a percentage of our earnings , national insurance which is also a state tax and anyone over 24 years old has to have a pension.
Thanks for your response, by mandatory I meant any payments that automatically get taken out of your salary.
What do you mean by '1099 don't have anything taken out???'
Thanks again
SC
1099 (I think) means no taxes are taken out so at tax time you have to indicate how much you earned and probably pre-pay taxes....Look up Form 1099 online. I think my wife works 1099 that's why it came to mind.
401(k) is automatic but not mandatory, same with medical. You can choose not to contribute to retirement or medical insurance.
Also be aware not all States have a "State Income Tax", but some cities do have a local city income tax ( most notably in Ohio).
Also "1099" denotes a person who is not considered an employee, but is known as an "independent contractor". Similar to being self-employed but paid by a company. A 1099 is the form they get at end of year reporting what they were paid. An employee receives a Form W-2 showing income and withholdings for Federal & State Tax purposes.
Social Security is a flat tax - 6.2% up to $128,400 salary
Medicare is a flat tax - 1.45%
Federal Income tax is graduated
State Income tax is either graduated or flat. Kentucky is a flat 5%
MOST of Kentucky has local income tax too. Louisville for example has an additional 2.2% income tax
Retirement isn't mandatory - you can go through your whole life here and never save for retirement
Healthcare isn't mandatory per se, but a whole lot cheaper through your employer. None of us can really help with how much, but your portion for a single person can be fairly low. The most I've seen is $500/mo, the least $0, usually under $200. Right now there is also a federal (and sometimes state) tax penalty for NOT having insurance.
You'll most likely be paid every 2 weeks, to start with. (There are exceptions.)
After all my deductions, contributions, retirement, etc., is funded, I "take home" about 70% of my salary.
If you need more details - read on - otherwise - that's it!
Some of your entire overall pay (we call that "the gross pay") is deducted for:
Federal Income Tax (~12-20%, unavoidable)
State Income Tax (~5% in Kentucky)
Local / County Income tax (Varies by Location, but typically 1-2%, if applicable)
Our mandatory retirement contribution here is referred to as "Social Security" and it, too, is automatically deducted from your pay, about 6% I think. ("Social Security" is the bare minimum. It's what our "fixed income" OLD people live on, month to month. Many get by, but it's far from "good money.")
There's also Medicare Tax, Unemployment Tax, and Workers Compensation Tax, each adding a percent or two.
In end, you'll pay 20-30% of your pay in taxes, overall, which are mandatory. (Just on average ... it can be more or less.)
THEN -
Depending on where you work, and at your employers discretion, generosity, or greed, depending on political viewpoint, you may choose / be offered an additional road to retirement savings, with some tax benefits (maybe). This amount can vary tremendously, but, in general, is entirely voluntary, and is routed to an investment program of some sort. Your employer may also "donate" to this.
Next, "health insurance" is not one of our taxes. Many employers provide a discounted insurance (or completely "free" in some cases) - so the remaining amount (after the discount) is taken from your pay. This also varies widely, from nothing to several hundred dollars a month.
At the moment, health insurance is not compulsory.
You'll most likely be paid every 2 weeks, to start with. (There are exceptions.)
After all my deductions, contributions, retirement, etc., is funded, I "take home" about 70% of my salary.
If you need more details - read on - otherwise - that's it!
Some of your entire overall pay (we call that "the gross pay") is deducted for:
Federal Income Tax (~12-20%, unavoidable)
State Income Tax (~5% in Kentucky)
Local / County Income tax (Varies by Location, but typically 1-2%, if applicable)
Our mandatory retirement contribution here is referred to as "Social Security" and it, too, is automatically deducted from your pay, about 6% I think. ("Social Security" is the bare minimum. It's what our "fixed income" OLD people live on, month to month. Many get by, but it's far from "good money.")
There's also Medicare Tax, Unemployment Tax, and Workers Compensation Tax, each adding a percent or two.
In end, you'll pay 20-30% of your pay in taxes, overall, which are mandatory. (Just on average ... it can be more or less.)
THEN -
Depending on where you work, and at your employers discretion, generosity, or greed, depending on political viewpoint, you may choose / be offered an additional road to retirement savings, with some tax benefits (maybe). This amount can vary tremendously, but, in general, is entirely voluntary, and is routed to an investment program of some sort. Your employer may also "donate" to this.
Next, "health insurance" is not one of our taxes. Many employers provide a discounted insurance (or completely "free" in some cases) - so the remaining amount (after the discount) is taken from your pay. This also varies widely, from nothing to several hundred dollars a month.
At the moment, health insurance is not compulsory.
Am I forgetting any? I'm not a CPA!
Thanks for such an informative response! That's roughly what I currently pay here in England so isn't too bad I guess.
The next thing I wanted ask was holiday/vacation, is there a minimum amount of paid leave your employer must give you or can they call it what they want? I'm still in the early stages of talks with my employer as to what my role/compensation package would look like so these aren't things that I've been able to go over with them.
A big part of the reason I was even considering coming out to the states was because it would give me chance to explore more of it than I ever would be able to afford coming from the UK.
Normal vaction for a new hire used to be two weeks per year, and three weeks after 5 years, and 4 weeks after 20 years. Sick time would vary from company to company. Mine was 5 days per year. You had better carry good health insurance as a hospital stay could cost you $10,000 a day.
Quote:
Originally Posted by Salad19
Thanks for such an informative response! That's roughly what I currently pay here in England so isn't too bad I guess.
The next thing I wanted ask was holiday/vacation, is there a minimum amount of paid leave your employer must give you or can they call it what they want? I'm still in the early stages of talks with my employer as to what my role/compensation package would look like so these aren't things that I've been able to go over with them.
A big part of the reason I was even considering coming out to the states was because it would give me chance to explore more of it than I ever would be able to afford coming from the UK.
Thanks
SC
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