Do you pay both federal AND state income tax? (deposit, California, deduction)

[Pitt Chick]

Originally Posted by svedski

Ouch.

So basically, I should pay 33% (federal) + 20% state = about 50% tax?

That's a little bit lower than here in Sweden (75%) but damn, I always thought "Capitalist America" had low taxes.

Don't forget your county tax, school tax and local tax!

[golfgal]

Originally Posted by Pitt Chick

Don't forget your county tax, school tax and local tax!

If you have those....

We just have property taxes that cover those, no other "local" taxes.

Effective tax rates, as were illustrated by bUU are more accurate. It's the rare tax payer that actually pays their full tax rate.

[bbnetworking]

Originally Posted by svedski

Ouch.

So basically, I should pay 33% (federal) + 20% state = about 50% tax?

That's a little bit lower than here in Sweden (75%) but damn, I always thought "Capitalist America" had low taxes.

How did you get 20% state? I thought the highest state tax in California is around 11-12%? If income is $200k he will be paying less than that. maybe 10%

[AmFest]

Originally Posted by svedski

Ouch.

So basically, I should pay 33% (federal) + 20% state = about 50% tax?

That's a little bit lower than here in Sweden (75%) but damn, I always thought "Capitalist America" had low taxes.

think about it. In America you take home half of what you make. In Sweden you take home a quarter of what you make. So in America you take home twice as much. Isn't that some difference?

[AmFest]

Originally Posted by bbnetworking

How did you get 20% state? I thought the highest state tax in California is around 11-12%? If income is $200k he will be paying less than that. maybe 10%

he probably lumped social security and Medicare taxes with state income tax even though that's not correct; Medicare and social security taxes are federal taxes.

[harry chickpea]

Many corporations set up a storefront or tiny office in a state that is more amenable to them and provides tax advantages. Most of the credit card companies use a state in the mid-west because laws there were tailored to draw them in. Lots of companies incorporate in Delaware for similar reasons.

Depending upon the corporation type, there may be no tax due. A subchapter S corporation does a pass-through of profits to the individual's tax burden. So, for instance, if you live in Florida you pay a $150/year filing fee, collect sales tax, and have no corporate tax on a subchapter S AND pay no state income tax.

[Hemlock140]

Originally Posted by PokerMunkee

Can always live in a state with no income tax:

Alaska
Florida
Nevada
South Dakota
Texas
Washington

But on the other hand, the state of Washington, and many cities within have a Business & Occupation tax on gross revenue, profit or not. Many cities even have a "head tax" on the number employee hours worked.

[Tallysmom]

I'm in California, we own a small business and we pay about a total of 4% in state taxes. If you find a good accountant, there are ways to lower your tax bills that are perfectly legal. Owning your business there is a a lot of write offs that help.

[svedski]

Thanks for all the replies, very educational!

I'm already starting to regret having incorporated in California (the reason being because I wanna move there).

Anyway. Yes, the taxes in California should be around 11% in income tax plus 8-9% in corporate tax (thus, 20% in total).

Tallysmom: May I ask, you pay 4% in state taxes...is that both corporate tax and income tax combined? How much do you pay in federal taxes?

All in all...at the end of the day, how many % of everything you make goes to Uncle Sam?

[Pitt Chick]

Originally Posted by svedski

All in all...at the end of the day, how many % of everything you make goes to Uncle Sam?

Uncle Sam = the federal government, and that was answered in depth a few posts up.


As far as everyone else... that varies by state, by county and by town!