Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hi. I've posted a few messages here some months ago. I was about to move from France to CT. It was a bit delayed because of the early birth of my son but it's sure now, we're arriving next week!
I wonder how income tax work in the US and in CT. My boss told me the tax rate is around 30% but I'd like to know whether it is function of how many people live with you or where you live...?
Can someone explain the basics? (I'm French and income tax is VERY confusing in France so feel free to go into details if you feel like )
If you move to Connecticut, you will most likely be subject to the following tax types:
Federal Income Tax
State Income Tax
Social Security Tax (payroll tax)
Medicare Tax (payroll tax)
Motor Vehicle Property Tax
CT Sales Tax
Real Estate Property Tax (if you own property)
Here goes....
I. Certificates for Federal and State Tax Withholding
When you begin employment in CT, your employer will ask you to complete and submit a Form W-4 - Employee's Withholding Allowance Certificate, to indicate your tax filing status (single, married, exemptions, etc.), and elect to have federal income taxes withheld from your paycheck each pay period. Here is a link to this form:
In addition, you will need to complete and submit a Form CT-W4 - Employee's Withholding Certificate, which is similar to the federal Form W-4 described above, but this is for state tax withholding purposes in Connecticut. The form looks like this:
With each paycheck, you will see that federal and state income taxes (as well as federal payroll taxes) will already be withheld from your paycheck. Your employer's payroll provider (ADP, for example) will collect the taxes and send it to the federal and state governments.
II. Determining Your Tax Liability
You will pay three types of federal taxes: income, Social Security and Medicare taxes. Your income tax liability will depend on your gross earned income. The federal income tax system is a graduated tax system. That means each higher layer of income is subject to a higher tax rate. The federal incometax rates are as follows (check to see which table applies to your situation [i.e. single vs. married]):
In addition to that, you will pay Social Security tax, which is approximately 6.2% of your gross income, but any gross income over $118,500 is NOT taxed.
And you will also pay Medicare tax, which is approximately 1.45% of your gross income. But any income over $200,000 (if single filer) is taxed at 2.35%.
For CT state income tax, you will also pay a rate according to the graduated tax table, depending on your filing status, as indicated in the following table:
In general, most retail or online purchases within the state of Connecticut will charge a sales tax of 6.35%. Certain items are excluded, however. If you go tanning, you will pay a 10% federal sales tax. If you purchase a luxury item ($50,000+ car or $1,000+ purse, for example), you will pay a 7% sales tax. Sales tax is paid at the time of purchase of goods or services. It is similar to French VAT (a transaction tax).
If you will own a vehicle while living in Connecticut, you will have to pay a motor vehicle property tax, due each year in August. The tax is based on the value of your vehicle as of October 1 in the preceding year, and depends on the mill rate in the city or town in which your vehicle is registered in.
If you will own property in CT (house, condo, land), you will have to pay a property tax each month. It is included in your monthly house payment. The average house in an average city or town in CT will charge anywhere from $4,000 to $6,000 per year in property taxes.
IV. Filing Your Tax Returns
If you start working here in Connecticut during 2015, you will file your first tax return in 2016 (due April 15 each year). This tax return will be based on your earnings from 2015. You can either go to an accountant or file the taxes on your own (online or by paper mail). The federal income tax return, Form 1040, looks like this:
In most cases, you can expect about 20-30% of your income to be taxed, but again, it depends on how much you are earning. If you tell me exactly how much you will be making, as well as your filing status, I can compute your exact paycheck amount (net pay) for you right now.
Also, make sure you purchase health insurance, if your employer does not provide it for you. It is now required, in the United States, because of Barack Obama's Affordable Care Act of 2010.
I am a corporate tax accountant, so I know everything about taxes.
Hi. I've posted a few messages here some months ago. I was about to move from France to CT. It was a bit delayed because of the early birth of my son but it's sure now, we're arriving next week!
I wonder how income tax work in the US and in CT. My boss told me the tax rate is around 30% but I'd like to know whether it is function of how many people live with you or where you live...?
Can someone explain the basics? (I'm French and income tax is VERY confusing in France so feel free to go into details if you feel like )
Thanks !
Matt
30% seems very high to me -- I would say more like in the 25% range, maybe?. As an employee, you will get to choose the number of dependents you want to claim for your withholdings right off the bat -- your HR department person will give you the forms to fill out on day 1 of your new job. If you choose 0 (meaning no dependents), then the highest rate taxes for your salary range will be withheld from your paycheck. As someone coming from France, I am assuming you'll be here on either an H or L visa, and that your spouse (do you have a spouse who will be joining you?) will not have work permission in the States and will be entirely dependent upon you? If that's the case, you would then want to claim your spouse and child as dependents (so that would be "2" as opposed to "0"). Whether or not you claim yourself is up to you -- keep in mind if you claim too many up front, you very likely will owe taxes the following April 15th for the previous year's earnings. I would talk to a tax accountant, or to Nep, who's the guy who responded to you first. Nep??
30% seems very high to me -- I would say more like in the 25% range, maybe?. As an employee, you will get to choose the number of dependents you want to claim for your withholdings right off the bat -- your HR department person will give you the forms to fill out on day 1 of your new job. If you choose 0 (meaning no dependents), then the highest rate taxes for your salary range will be withheld from your paycheck. As someone coming from France, I am assuming you'll be here on either an H or L visa, and that your spouse (do you have a spouse who will be joining you?) will not have work permission in the States and will be entirely dependent upon you? If that's the case, you would then want to claim your spouse and child as dependents (so that would be "2" as opposed to "0"). Whether or not you claim yourself is up to you -- keep in mind if you claim too many up front, you very likely will owe taxes the following April 15th for the previous year's earnings. I would talk to a tax accountant, or to Nep, who's the guy who responded to you first. Nep??
Anyway, I can't giver her a finite answer, because she needs to give more details about her living/household situation and her income.
Everyone pays US federal income taxes (10% to 39.6%) and FICA (about 7.7%). Depending on the state of employment and/or residence, there might also be state/county/town taxes. CT residents pay between 3% and 6.7%.
In addition, there might also be tax implications in your home country, but the US and most US states have tax treaties to prevent double taxation. Consult the IRS web site.
Like anywhere else, the US tax code is rather complicated, but the IRS site, tax-rates.org, and the replies to your question here should give you a pretty good idea.
Hi. Thanks a lot for your detailed answers.
I'm married with one baby and my annual gross salary will be 130k paid bi-weekly. I'll have a HSA that is mostly funded by my employer but I'll put $150 per pay period.
Not sure to understand that part from Lalalally:
"keep in mind if you claim too many up front, you very likely will owe taxes the following April 15th for the previous year's earnings"
Can they really make me pay tax on my incomes when I was not in the US?!
You would be responsible for paying the income tax owed on income you earned while you were living in the States.
If you move here from France next week, and if you file too many exemptions on your W-4, then when you file for 2015's yearly tax return in April of 2016, you will find that you owe income from mid-January through December. Conversely, if you file too few exemptions, you will find at the end of the year the IRS (and/or State revenue service) will owe you money, which you can have direct deposited into your bank account. That refund then becomes added to NEXT year's income, which is taxable.
W-4 forms (there are both a federal and state version) are some of the forms you can expect to receive from the HR department on the first day of your new job. The questions asked on the form relate to your annual salary and the number of exemptions you want to claim, which is used determine the amount of taxes withheld from your paycheck . Claiming "zero" exemptions means the highest amount of taxes will be withheld from your paycheck; AND the more exemptions you claim, the less that will be withheld.
BUT .... next year, when you file your tax return, there will be a "predetermined" amount of taxes you should have paid throughout the year based on your salary; and if you claim too many exemptions upfront on the W-4 forms, and have not paid that minimum determined amount, you will owe the difference next year. I would talk to a tax specialist, especially if you expect to receive year end bonuses, which could potentially put you into another tax bracket. You want to pick your exemptions wisely with the goal being that it comes out as pretty much even end of the year (i.e. you don't want to owe; but you don't want too much of refund either.)
Here are links to the federal and state withholding forms that you will be asked to complete when you start your new job -- just so you can familiarize yourself with them. http://www.ct.gov/drs/lib/drs/forms/...ding/ct-w4.pdf
Hi. Thanks a lot for your detailed answers.
I'm married with one baby and my annual gross salary will be 130k paid bi-weekly. I'll have a HSA that is mostly funded by my employer but I'll put $150 per pay period.
Not sure to understand that part from Lalalally:
"keep in mind if you claim too many up front, you very likely will owe taxes the following April 15th for the previous year's earnings"
Can they really make me pay tax on my incomes when I was not in the US?!
Thanks again!
Matt
Under some conditions, if you will be a "Resident Alien", your non-US incomes are subject to US Federal income tax. You need to read: Taxation of U.S. Resident Aliens
NEP-321, can you advise on this issue, and does he need to apply for an ITN or SSN ? General ITIN Information
Regarding selecting the best entries on the Federal W-4 Withholding form, there is an IRS on-line Calculator that helps select the best entries for his specific situation. It is at IRS Withholding Calculator. I'm not aware of a CT equivalent, but the choices appear to be simpler that the Fed W-4.
Re CT State taxes, for the first partial year you are here, I think you would file the CT Part-Year Resident form at DRS: Part-Year Residents.
Based on my son's experiences as a US citizen working in London England, I have to think these income tax issues are even worse for non-citizens here in the US . AFAIK, the US is only 1 of 2 countries that taxes everyone on their world-wide income.
Like he did there, you may need to plan on hiring a tax adviser experienced in non-citizen tax issues.
Hi. I've posted a few messages here some months ago. I was about to move from France to CT. It was a bit delayed because of the early birth of my son but it's sure now, we're arriving next week!
I wonder how income tax work in the US and in CT. My boss told me the tax rate is around 30% but I'd like to know whether it is function of how many people live with you or where you live...?
Thanks !
Matt
Generally you will pay more tax here than in France if you add federal +state+property+SS+medicare+health care+educational costs. Especially considering what you get in France for your taxes vs what you get in the US - here you get pretty much NOTHING because they spend all your tax money on wars, military, CIA etc. but not on social programs.
Here's paycheck calc for you: Salary Paycheck Calculator | Payroll Calculator | Paycheck City
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
)
. AFAIK, the US is only 1 of 2 countries that taxes everyone on their world-wide income. 
