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Can someone please help to gain some information on the taxation process in US.
I will be moving from India. Though I got some information from various sources but never asked to anyone in NJ.
It would be great someone explain with little illustration (i understand taxation is indeed a bit complicate to explain). I would be moving to Somerset, NJ as a family (Infant and Spouse).
With the gas tax, NJ paid 2.95 to 3.05 a gallon this weekend while in VT my bro in law was paying 3.65.
Your employer should have a 'cultural consultant' or something similar associated with a realator who will set you up with all you need to know. Beyond that an accountant will help you invest your money for the best return and minimum taxation.
Unfortunately we have state income tax in NJ. these days most states have state income tax. NY and others do also. NYC also has a city tax. Then everyone has federal tax also withheld.
As others mentioned we have a 7% state sales tax but necessities are not supposed to be taxed such as food and clothing in NJ. NY has a higher sales tax and applies to most everything.
Unfortunately we have state income tax in NJ. these days most states have state income tax. NY and others do also. NYC also has a city tax. Then everyone has federal tax also withheld.
As others mentioned we have a 7% state sales tax but necessities are not supposed to be taxed such as food and clothing in NJ. NY has a higher sales tax and applies to most everything.
You will need to first find your taxable income. This will be your total income for the year (April 15th to April 15th next year) minus the deductions. Money put into 401K (Provident Fund) is also exempt from Taxes in the current year.
There are two ways of determining the deduction. You can choose the one that is higher for you.
(1) You can take the standard deduction which is a flat amount. Standard deduction is $6100 for one person another $6100 if you are married and filing jointly (in which case you will need to add your wife's income). There are additional deductions for kids too. OR
(2) Itemized deductions- There is a complicated tax code to determine this. It depends on you investment profit and losses, property tax you paid and a million other things.
Once you know your taxable income, then you first calculate the Federal Income Tax-
10% on taxable income from $0 to $8,925, plus
15% on taxable income over $8,925 to $36,250, plus
25% on taxable income over $36,250 to $87,850, plus
28% on taxable income over $87,850 to $183,250, plus
33% on taxable income over $183,250 to $398,350, plus
35% on taxable income over $398,350 to $400,000, plus
39.6% on taxable income over $400,000.
Then there is Social Security and Medicare Taxes. Social Security tax rate is 6.2 percent on income under $113,700 through the end of 2013. The Medicare tax rate is 1.45 percent of all income. Social Security and Medicare are not subject to any deductions.
Then there is NJ state Tax-
1.4 percent on the first $20,000 of taxable income.
1.75 percent on taxable income between $20,001 and $35,000.
3.5 percent on taxable income between $35,001 and $40,000.
5.525 percent on taxable income between $40,001 and $75,000.
6.37 percent on taxable income between $75,001 and $500,000.
8.97 percent on taxable income of more than $500,000.
If you own a home, there is property tax. It will be typically 7K to 15K in NJ. It depends on the town and size/characteristics of the house. It is independent of your income. If you rent, you do not have to pay property taxes.
Sales tax is charged on some items at 7% of the cost of the item. You pay this tax at the time you buy the item. This tax is also independent of your income. I think most groceries, clothing+ shoes under $120 do not incur any sales tax.
I got all rate information posted above by doing a few quick 2 minute google searches, my info could be wrong/outdated, but still it will give a pretty decent idea of your final taxes/ income.
Last edited by 4NJseasons; 10-18-2013 at 12:29 PM..
Reason: Typo.
You will need to first find your taxable income. This will be your total income for the year (April 15th to April 15th next year) minus the deductions. Money put into 401K (Provident Fund) is also exempt from Taxes in the current year.
Income is from January 1 to December 31 inclusive, not April 15 to April 15.
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