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Old 07-16-2011, 04:51 PM
20 posts, read 69,252 times
Reputation: 26


Hello, I'd like to have some feedback about income taxation in the US - your thoughts etc. I am a little confused. I have never been to the States. But still, I have some intention to have US work/life experience - maybe for a year or two - after I become Canadian citizen. I am looking for feedback from you about taxation. I tried to calculate my net pay from various sites state by state. My question is more about federal income tax. If I move to the States, I will be legal worker and probably it will be for short term. So I am not worried about property taxes or house renovation rebates or house prices. I am curious about the money I'd save to myself left from my salary.

About me - my current status
I am a single professional , 30 yr old, living in Canada. My paycheck has deductions for Federal Income Tax, Provincial Tax, Employment Insurance, Canada Pension Plan and some other small amounts. So far I have lived in Quebec and Ontario only. My approximate income deductions were around 35% in Quebec and %29 in Ontario (between 60K-70K annually). On top of that, I pay around %13 sales tax on most goods I purchase. Annual tax filing may return as a refund or the opposite way. When I moved to Quebec, for instance, I had to pay $600 to the Quebec government. In Ontario I got refund most of the time with the same income.

I guess there are few states who don't impose state income tax or sales tax. As far as I understand, the biggest income deduction looks like the federal income tax. I assume there is no state in the US that doesn't have federal income tax. I'd like to know how common it is that you get refund from the federal government at the end of the year - considering your have one income only? If there is no refund, US and Canadian salaries are almost same for me.. US is just slightly higher by 100-200$ per bi-weekly payment. If this would be the actual difference, I think I'd consider places that have low cost of living.

Thanks for any feedback about tax refunds and income taxation. I'd specifically appreciate feedback from users who have lived in both US and Canada.
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Old 07-16-2011, 10:58 PM
13,158 posts, read 27,519,600 times
Reputation: 13044
The federal income taxes are just that- federal- and are dictated by the IRS (US government's tax collection agency). They are separate from state income taxes, which some states have and others don't.

Federal and state (when applicable) income taxes, along with FICA (medicare for poor/elderly that all taxpayers support) and Social Security (basically US pension program) are deducted from your paycheck throughout the year. If your gross salary is $2,000 per week and your estimated taxes (based on salary) all add up to $600, then your paychecks would be for $1,400 and the $600 would be paid to the government by your employer.

At the end of each year, each person with US income fills out an IRS tax return which calculates how much you owe based on your total annual income (salary, capital gains from stock or real estate sales, other income, etc) and the tax credits and deductions you may have by being a homeowner or giving to charities or unreimbursed medical or business expenses or a host of other credits and deductions. These credits & deductions lower the amount of taxable income you have. The % of taxes you pay is based on your taxable income (not salary) and the %'s increase as you make more money. About half of Americans don't have enough taxable income to owe any taxes while those who make $500k+ may end up paying over 30% of income towards just the federal income tax portion alone.

If you have already paid more than you owe via paycheck deduction, then you get a refund. There really is no good estimate to give you as it depends on so many factors like credits and deductions. If you owe more, then you write the IRS a check for the difference.

Hope this helps give you a basic explanation of US personal income taxes.
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Old 01-16-2015, 05:59 PM
Location: southwestern PA
21,214 posts, read 45,632,755 times
Reputation: 43395
The person you quote on this 3.5 year post has been gone since 12-09-2011.
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Old 01-16-2015, 06:01 PM
Location: Maryland
282 posts, read 374,668 times
Reputation: 338
Good point.
I was linked to this topic by the "similar threads" feature of this forum, and I didn't see how old it was.
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Old 01-16-2015, 06:05 PM
Location: southwestern PA
21,214 posts, read 45,632,755 times
Reputation: 43395
I just don't want you waiting from a reply from him/her!
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