Taxes are an integral part for every developed country. The standard of living in the United States is quite high, and taxes that are paid by all residents of this country play an important role in this. Tax evasion is severely punished, so if you want to move to America, you need to know in advance about all taxes in the United States for individuals. You can read more about this in this article.
US Taxes
Payment of taxes is required for all residents of America who have a "green card". The US tax system itself is an intricate and complex structure in which only public servants themselves fully understand. In general, taxes in the United States serve the following purposes:
- Fill the budget.
- Stimulate the growth of individual sectors of the economy by reducing the tax rate in it.
The tax system is based on principles that ensure justice for all residents of the country. In particular, in the USA the tax has a progressive rate, which provides each person with a level of payment that is affordable to him. Most taxes are levied in parallel, this allows you to distinguish between structures and make more efficient use of taxpayer money. Finally, each person has the right to find out what exactly his taxes go to - information is published in the public domain. Thanks to these principles, the US tax system is one of the most effective in the world.
Benefits and exemptions
Every US resident must fill out tax returns and pay payments to the state treasury regularly. Filling out declarations can take more than one hour, but evasion is severely punished. The offender may be fined an impressive amount or sentenced to lengthy imprisonment. All individuals and legal entities are required to pay tax deductions. Payments are monitored and collected by a dedicated IRS. There are three levels of checking the solvency of citizens. If necessary, civil servants check the information coming from banks, from other payers and from human colleagues. Therefore, few people manage to evade their obligations.
Despite the apparent complexity, there are a number of concessions in the US tax system. All payments and money that an American citizen receives in any way are tax deductible. In addition to the benefits of training. In this case, the student is not required to pay part of the amount received to the state treasury. The same is true for alimony paid by a person. However, for the other party that receives this amount, alimony will continue to be taxed.
How to fill out a tax return?
A tax return is a taxpayer statement about the funds received by him during a certain period. In the USA, a tax return is filled out and filed at the beginning of each year - from January to mid-April. This is a rather complicated procedure, and for many newcomers it can be difficult to deal with a complex tax system. Who is required to submit this document to the IRS? Every US citizen, as well as people in the United States on a work visa and holders of a green card.
You can file a declaration in several ways: the old fashioned way using mail or via the Internet. The tax service has tried to simplify the entire process to the maximum, so there is nothing complicated for people who speak English. You just need to choose the appropriate tax form, prepare a calculator and calculate a little.If you do not want to understand all the nuances, you can use one of the commercial sites or companies that offer their services in filling out a tax return.
Tax levels
The tax system of America has several levels at which taxes are levied. The highest level is federal. It is followed by states that also have the right to make their payments. Each state sets its own size, so in some places in America it is much more profitable to live than in others. And finally, local governments also have the right to impose taxes to supplement the budget and implement goals for the benefit of taxpayers. Despite this, some taxes may be levied at several levels at once.
- Federal taxes for individuals in the United States account for 70% of the state budget, and therefore are very important for it. The replenishment of the treasury at the federal level is strictly monitored. Fees are charged on sales, excise taxes, property, excess profits, wages and other types of income. All taxes for individuals in the United States at the federal level have a progressive rate.
- State taxes are individual for each region. States may independently charge and change tax payments in accordance with the law. But at the same time, US citizens always know in advance what specific amounts they will need to pay.
- Local governments most often have significant financial resources that are derived from taxpayer money. At this level, income tax, income taxes, real estate, excise taxes are levied.
Federal income tax
It is income tax from individuals in the United States that provides the main content of the treasury. For all states, it is the same and is assigned on a progressive scale. This means that the amount of tax will depend on your profit: the more money you receive, the higher the tax deductions. For the poor, income tax is minimal. If you receive less than 10 thousand dollars a year, then you will need to pay 10% of your money to the treasury. The highest bid is assigned to people whose income per year exceeds 311 thousand dollars. For them, the amount of income tax in the United States is 35%. But there is good news: in the tax system of the United States there are certain benefits that help single people and some other groups of people survive. Lonely people who receive less than 7 thousand dollars a year are exempt from income tax. The same applies to spouses, who collectively receive less than 14 thousand dollars. For widows and widowers, less than 10 thousand dollars a year is considered to be non-taxable.
Income tax in the United States for individuals and legal entities is a significant item of expenses that must be paid regularly if you do not want to receive a much larger fine. Former US citizens who have moved to another country are not exempt from taxes - they are required to pay deductions for another 10 years after the move. If you are employed by a company, then it can pay this tax for you, giving you only net profit. But most people pay this tax on their own at the end of the year.
State income tax
What taxes do individuals and legal entities pay in the USA, in addition to federal income tax? Another income tax is levied by the states on their residents. Moreover, each of them is free to set his own rate, therefore, in different regions the income tax at this level can vary significantly. In eight states, it is completely absent. These are Alaska, Texas, Florida, Nevada, South Dakota, Wyoming and Washington. Moreover, each region has the right to establish a tax rate: in some states it is progressive, in others - constant. Therefore, many companies open their offices and factories in tax-exempt states - this allows them to reduce the cost of production and make their products more affordable.Which states are the most “expensive” in terms of income tax?
- New York (12.6%);
- Connecticut (12.5%);
- California (11%);
- Illinois (10%);
- New Jersey (12.2%).
The cheapest tax rates are in less attractive states such as Alaska, Louisiana, New Hampshire.
Property tax
US property tax is an integral part of the welfare of Americans. Deductions from this tax go to the treasury of municipalities and local authorities, due to it firefighters and janitors are kept, roads are made and lawns are planted. What is included in property tax? First of all, it is a property tax. The choice of housing in America is an important stage, because it will depend on what school children will go to, what class people will surround you with. Typically, in good areas with expensive private schools, property taxes are much higher. This creates some social exclusion that only people with above average income can get a good education, which is why there is heated debate in America.
The lowest taxes in the states of Hawaii, Alabama, Louisiana and in South Carolina. But you can buy a house with a lower price in other regions, simply by choosing a less prestigious area. This tax for individuals in the United States needs to be paid more often than income tax: twice a year.
Another property tax: car tax. But it is so insignificant that most often it is not taken into account at all. The procedure for paying this tax is very simple: you just need to make a couple of mouse clicks and pay it online.
Social tax
Another important tax in the United States is Social security tax. This is a social tax that provides support to vulnerable groups: the elderly, the disabled and the unemployed. Moreover, it is calculated not from the tax base, but from the net amount of your income. If you are officially employed, then wages are issued to you already taking into account the deduction of this tax. The rate is standard for all states and amounts to 4.2% of annual revenue. If you are self-employed, and you are an employer, then you will have to pay a little more - 6.2%. The highest rate - for people working for themselves - 10.4%. These include freelancers and other self-employed citizens. Tax evasion doesn’t work out - IRS clearly records and checks all the income you received.
Free medical care
Medicare is a medical program that allows you to receive qualified help from specialists to people over 65 and people with disabilities. The fact is that in America the cost of insurance can reach several thousand dollars, which not every elderly person can afford to pay. Therefore, a program was developed that exists at the expense of tax deducted from wages. If a person regularly paid deductions for at least 10 years, if necessary, high-quality and inexpensive medical care will be available to him. The amount of tax under the program is only 1.5% of income. Your employer will have to pay the same amount if you decide to participate in Medicare.
Sales tax
Sales tax is the second and most significant after income tax. This is the tax that absolutely all Americans face, regardless of status and place of residence. Each product is subject to this tax, and when buying a person most often does not know its final value. Some goods and services are exempted from this tax as an exception. Sales tax is a direct and understandable way to replenish the state budget. A person clearly sees how much and why he pays. Such a system contributes to the prosperity of the states and the promotion of goods. With the advent of online stores, the collection of sales tax has become much more complicated.Many companies have moved their offices to tax-free states, so most of their customers do not pay Sales tax and buy goods at the original price.
Taxes for non-residents
Almost everything is taxed in the States. Any movement of money, whether it is profit or the purchase of something, requires the taxpayer to pay a certain amount. Taxes in the USA for non-resident individuals also exist and are an obligatory expense item. Even if you are not a citizen of the United States, you still need to pay royalties to the state. In general, the list of taxes is the same as for holders of American citizenship. Non-residents will need to pay the following deductions:
- US Income Taxes.
- State tax.
- Social Security & Medicare Taxes taxes.
- Unemployment tax.
- Sales tax.
- Property tax.
Before leaving the United States, tax non-residents are required to obtain a certificate of good faith tax compliance. Otherwise, they simply will not be allowed to leave the country until all debts have been paid.
The average amount of all taxes
What taxes are required for individuals in the United States? These are taxes on income, social tax and medical program tax. The average wage in America is 80-90 thousand dollars. From this amount, the employee will have to pay federal income tax (about 18%), state tax (0 to 12%), social tax (4.2%) and Medicare tax (1.5%). It turns out the amount of about 16-20 thousand dollars a year, depending on your status and place of residence. The amount of all taxes reaches 20-30% of the income received and is a tangible expense item. Often, the remaining money is almost completely "eaten up" by the rent and the cost of food and medical care. But despite all the disadvantages, the tax system in the United States is one of the most effective in the world precisely because of its multi-stage nature and size of payments.
