US taxes - not as bad as you might think

[Gary and Alla 3,694]

That's interesting data, but what do you pay for healthcare insurance for your family? Before you can compare your taxes to Canadian taxes, you have to take that in to account as well. Was your income similar in Canada?

That is all well and good, Trailmix, but also ignoring many facts.

If we want to know the real cost of Canadian healthcare, we have to include what amounts to a two-tiered system in Canada where the people who can afford it are buying private health insurance and/or paying cash in the USA where 90% of Canadians live within a 1/2 day drive of. Our medical facilities here (of which there are far more than should be for the population of our area) are heavily used by Canadians. Within an hour's drive of here are about 200,000 Americans and 2 MILLION Canadians. Our medical parking lots are full of Quebec license plates. This is nothing less than a major "pressure relief" valve for the Canadian system and if we employ a similar system here, the Canadians will have to stay in Canada and your taxes are going to go up. Very few of the Canadians here are here because they were sent by your health system, they are here to avoid your health system. That is a fact. You can like it or not.

The United States spends a large amount of it's GDP on national defense. You can like that or not, but it will not change and a goodly portion of that goes to protect our good friends to the north, which you can also like or not. There are plenty of troops right here training with the 10th mountain division on the backside of Mt Mansfield in Vermont that have a MAPLE LEAF on their shoulder patch and the f-16s (soon to be F-35s) circling over my house are about 30 seconds flying time from Montreal. If your country ever experienced any sort of threat, the Green Mountian Boys would be over Montreal in the blink of an eye. This is not a disparaging remark and I sleep much better knowing that the international border just a short distance from my bedroom window is Canada and not Belarus or North Korea. whatever we can do to maintain our good realtions with our good and loyal friends is fine with me. But the FACT is, Canada can devote a lot less of IT's GDP to national defense because of a good and strong neighbor within just a few seconds flying time of 90% of it's population.

You simply cannot make easy comparisons without full consideration

[Texanadian 10]

The USA has military bases in 130 countries. So you really can't go down the road of USA/Canada military protection.

Taxes in USA and Canada are similar, but different. In the USA, you deduct personal exemptions from the top of your income. In Canada it comes from the bottom. (advantage USA). But the medical deduction is 7.5% of gross AND have to file itemized in USA. It's 5% of gross and you still get to file the standard exemption in Canada. (advantage Canada)

No state income tax in Texas. Nice not only for the no tax issue. But also for less paperwork to do this time of the year. And less cross border stuff to deal with if you're in your 1st year in the US.

Social Security is crippling in the USA while CPP in Canada is much MUCH cheaper.

IRA's in the US have small maximum contributions. RRSP's in Canada have a much higher maximum contribution and aren't phased out at higher incomes like they are in the US. There is also a withdrawal penalty in addition to the taxes if you withdraw early in the US. No such thing in Canada.

You will also owe the IRS money if you move out of the USA in the future and make more than 90K a year. They get you on your world wide income. Canada just taxes you on your Canadian income.

[~PalmTreeGurl~ 154]

Yes! Im truly enjoying the fact there is no state tax here in Texas coming out my paychecks!!! Still have to file for living 6months last year in Georgia, but smooth sailing for the rest of our time living in Texas

[Texanadian 10]

Ok, ? ... In order for more taxes to be taken out, would filing Married at a single rate with a 0 or 1 be about right? I dont understand why filing Married with a 0 took out ALOT less taxes than filing Married with 1... and neither one of us did the "at single rate" thinking it needs to be changed to that... can anyone explain this to me.

The Married 0 vs Married 1 will depend on who makes more money and which choice they made. Really, the Married (any number) option is more for people who are married but only have one income. I'd recommend one or both of you filing as Married but taxed as single.

Married 0 is about the same as Single 2.5 (taxed less than Single 2 but taxed more than Single 3)

Dig up some tax tables from the IRS website and it will show you how much money would come off your paystub at any given taxable wage at all the Single, Married, 0, 1, 2, 3, etc options.

[~PalmTreeGurl~ 154]

The Married 0 vs Married 1 will depend on who makes more money and which choice they made. Really, the Married (any number) option is more for people who are married but only have one income. I'd recommend one or both of you filing as Married but taxed as single.

Married 0 is about the same as Single 2.5 (taxed less than Single 2 but taxed more than Single 3)

Dig up some tax tables from the IRS website and it will show you how much money would come off your paystub at any given taxable wage at all the Single, Married, 0, 1, 2, 3, etc options.

Thanks for this Info!

[hellINTIM 9]

The standard deduction in 2009 for a Married Filing Joint return is $11,400.

u got this all this year>?

[~PalmTreeGurl~ 154]

Plus, I was seeing something about $3650 per person.

42 Exemptions. If line 38 is $125,100 or less and you did not provide housing to a Midwestern

displaced individual, multiply $3,650 by the number on line 6d

[scandal 951]

IRA's in the US have small maximum contributions. RRSP's in Canada have a much higher maximum contribution and aren't phased out at higher incomes like they are in the US. There is also a withdrawal penalty in addition to the taxes if you withdraw early in the US. No such thing in Canada.

You will also owe the IRS money if you move out of the USA in the future and make more than 90K a year. They get you on your world wide income. Canada just taxes you on your Canadian income.

Canadian RRSPs are not directly comparable to American IRAs. In Canada, RRSPs are more like a hybrid of IRAs and 401(k)s in the US. Most Canadian employers have an RRSP plan that allows employees to make tax deductible payroll contributions, frequently with a company match. This is very similar to how 401Ks work in the US. In addition, Canadians can open and contribute to RRSPs on their own independently of their employment - analogous to American IRAs.

You are correct that the IRS considers the entire world income taxable by the US, regardless of residence, for all US citizens and permanent residents. In principle a US citizen born in a foreign country, who grows up and spends his entire life living and working in that foreign country, is obligated to file a tax return each year with the IRS, even if they never set foot once on US soil.

Canada has a much more understanding stance, and applies a tax obligation only on Canadian residents, and on expats who maintain ties and intentions to return to Canada. E.g., a Canadian who takes a 3 year work posting abroad and has kept a house and bank account in Canada would still be required to file with Revenue Canada while posted overseas. But a Canadian who has left Canada with no intention of returning is not required to file a Canadian return, even if they have retained Canadian citizenship. What you wrote is not quite correct - Canada will consider your foreign earned income taxable in Canada if you still maintain residency and intent to return to Canada.

The standard deduction in 2009 for a Married Filing Joint return is $11,400.

u got this all this year>?

I don't understand your question. The standard deduction for anyone married filing a joint return is $11,400 in 2009. This amount is indexed, so that every year it is increased. If you file a joint return, you will be able to claim this amount. In fact, as I pointed out, with the new Schedule L you may find that you can claim an even larger standard deduction.

Plus, I was seeing something about $3650 per person.

42 Exemptions. If line 38 is $125,100 or less and you did not provide housing to a Midwestern

displaced individual, multiply $3,650 by the number on line 6d

That's right. You can claim exemptions for yourself, your spouse (if filing jointly) and any dependents (e.g. children). Each exemption is worth 3650 this year, and the total exemptions are subtracted from your AGI to compute your taxable income.

Just for comparison, here is the 2009 Canadian Federal tax rates - which include full medical coverage and hospitalization for every Canadian:

Federal tax rates for 2009 are:

• 15% on the first $40,726 of taxable income, +
  
• 22% on the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
  
• 26% on the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
  
• 29% of taxable income over $126,264.
  

http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

This doesn't include provincial income tax, or other payroll taxes (EI & CPP).

[NickD 203]

Why are FICA taxes non-deductible, in other words you are paying income taxes on top of your FICA taxes, and FICA taxes are skyrocketing. Then you see line 20a if you do get SS benefits, you have to pay taxes again on that amount. That $3,650 dependent deduction is a bad joke, you simply don't pay taxes on that that may gain you an extra buck a day to raise that kid when government operated schools to babysit your kids for ten grand a year for only about 10% of the time. And you provide their transporation, food, clothes, medical to those schools. So if the government says you can raise a kid for a buck a day, they should charge you a dime a day to send you kid to school. Course if you don't, still have to pay, and they also will put in you jail.

We are paying 600 bucks a year just for taxes on our cable and cell phone with state and federal taxes, sales taxes are now on the bare necessities of life like clothes, and foods. Both were tax free a few years ago, but the state claims they are not getting their share of our federal income tax back from the feds, it's going to Iraq so they can have freedom. Or so they say, we have to set aside 550 bucks a month for real estate taxes to boot. When I purchased a new car with my GMCard and rebates, still had to pay sales tax on the full retail value of the car. They are also charging sales tax on energy and certainly a fortune on gasoline.

If you run a business you have to really build in all of your taxes if you want to stay in business and looking over P&L statements, hell they can keep the net income, just give me the taxes back. When you walk into a store or for any service, you are paying those additional taxes that have to be built in the selling price. This can add up to increasing everything you buy by at least 30%.

Bugs me you cannot adjust your savings for inflation, in particular when the inflation rate exceeds the interest rate, but you have to pay taxes on that interest and have less money at the end of the year than you started.

So they give you a little break now and then, even if you don't have to pay income taxes, you are indirectly paying taxes on everything you buy and need. Some estimates is that 70% of your purchasing power goes indirectly toward taxes. So you have both direct and indirect taxes you are paying.

If they give you a few bucks back, find another way to get that money back from you, in hidden taxes.

[one...two...tree 2,762]

We are paying 600 bucks a year just for taxes on our cable and cell phone with state and federal taxes...

Interesting that you bring that up, Nick. I'm trying to recall if there are taxes added to regular telephone service (landline)? I don't remember. How about water, trash, and electricity?

[NickD 203]

Interesting that you bring that up, Nick. I'm trying to recall if there are taxes added to regular telephone service (landline)? I don't remember. How about water, trash, and electricity?

We are billed an extra 16 bucks a month for that fire hydrant across the street based on the assessed value of our home on our water bill. Would be far better off if my home did burn down to the ground, insurance would cover that. Our energy bills have extra charges for people that cannot pay, wonder if that is even constitutional. Our land line has all of those excise taxes on it as well as does any form of jewelry. Guy working on your car is lucky to get 15 bucks an hour, but you pay closer to a hundred, is justifiable when you look over the overhead expenses in running a dealership.

Really have some of the sharpest minds in the country collecting taxes, thought of every loophole imaginable with very strict penalties if you don't pay. No out with the IRS with the likes of bankruptcy, don't pay your property taxes and you are out on the street. Our trash pickup is on our property tax bill, but does not include any appliance or large electronic item like a computer monitor, you have to pay a recycling fee extra for that after you hauled it over. Was 30 bucks to get rid of an old hot water heater. Wrecking yard was taking that for free, until they heard the city was charging that much, so they started charging 30 bucks to take your old hot water heater, even though they get cash for it.

[dalegg 143]

I dont understand something... Adam filed Married with (0) and I filed Married with (1) ... in a years time, they only took out $450 in fed taxes for him & took out $1650 from mine. It looks like his didnt have enough taxes coming out. Once we file Im afraid we are going to owe the gov. even after adding the $800 towards what we both paid, sure doesnt seem like it was enough taxes.

It's possible that it wasn't

But because of new laws it might be a good time to check your withholding. Last year the government changed withholding rules to put more money in peoples pockets.

The way the benefit works is that the Internal Revenue Service has issued new tax tables to employers, effective April 1. The tax tables reduce the amount of taxes withdrawn from your check, giving you a little more money to spend.

For example, a single worker making $50,000 and who gets a biweekly check should see about $20 more each paycheck.

However a few groups of people may get caught up in having too much money given back and find themselves owing the government when they do their taxes next April.

Those groups include workers with more than one job and households in which both spouses work.

If you have more than one job, it's possible that both employers could change your withholding causing you to keep too much money. It's also possible that your combined income could exceed the $75,000 limit at which the benefit is reduced. If you make more than $95,000 in gross income, you are not eligible for any of the credit.

It's common these days for couples to both work, which causes many families to get the tax credit though their combined income exceeds the guidelines, said Chas Roy-Chowdhury, head of taxation of the Association of Chartered Certified Accountants.

"So just make absolutely sure you don't end up getting on the wrong side of the IRS accidentally," he said.

Similarly, if you and your spouse file jointly and have a combined gross income of $150,000, the benefit is reduced. It's eliminated at $190,000. Your employer might not know your household income surpasses the limits and give you the money in your paycheck, which you'd have to pay back next April.

[Sofiyya 1,687]

A pop question to all the opponents of the health care bill - how much in taxes per household will need to be paid to cover it? Anyone?

How about Cap and Trade?

How long will you pay a tax before you get any health care, and how much will you pay for the health care premium, in addition to the tax, which you will also continue to pay? How much is the fine if you don't want one-size-fits-all Obamacare? How much will it cost to get out of jail and defend yourself against the government which would force you to have it, if you don't fight back?

Edited January 31, 2010 by Sofiyya

[trailmix 77]

You simply cannot make easy comparisons without full consideration

While some of what you say may be true, I was just trying to stay on topic, not trying to make everything black and white.

There was a comparison made to Canadian taxes, I stated that you have to take your health insurance payment in to consideration when making that comparison (including the portion your employer may pay).

Edited January 31, 2010 by trailmix

[Ali G. 37]

I think we should have higher taxes so we can provide the illegals with more benefits.

Tell me you are joking..