Living
Taxation
According to the US Constitution, Congress has the power to ‘lay and collect taxes…to pay debts and provide for the common defence and general welfare of the United States.’ Therefore, although tax rates in the US are typically lower than in other similarly developed countries in Europe and Asia, nearly everyone in the United States must pay taxes, whether they are citizens or immigrants. Tax money supports the government, the military, social welfare programmes, maintenance of roads, and many other things necessary for the running of the country. (American citizens or legal permanent residents working abroad must also report their earnings to the US government – it will later be determined whether they will have to pay taxes on those earnings.)
Individual states, and cities, also levy their own taxes: if you live or work in New York City, you can expect to pay federal, state, and city taxes (subject to your status in the country). Taxes will be deducted directly from your pay check; the amount depends on what filing status you choose when filling out your initial paperwork as you start your job.
Each year, by April 15th, you must file a tax return with the Internal Revenue Service (IRS). Your tax return is a collection of forms in which you submit proof of your earnings from the previous year, as well as a list of any assets you have.
Your accountant will then assess whether or not you have overpaid what you owe the federal and state governments. If you have overpaid, you will be refunded the excess amount from the US government and/or the state in which you live. If you have underpaid your taxes, you will have to pay the government the difference. (If you cannot afford to pay the entire amount at once, the IRS will usually allow you to make a reasonable payment each month.) Please be aware that neglecting or evading paying your taxes can lead to financial penalties, and in some cases, a prison sentence.
There are many deductions that you may be eligible for when filing your tax return. If you have donated to a charity, for example, or if you own property, you may be eligible to a deduction in taxes. Also, the amount of money you earn determines the ‘tax bracket’ you fall in, and that may also determine the rate at which you pay your taxes. This is an extremely complicated area of law, and it is best explored with the help of an accountant or tax attorney.
If you are a legal permanent resident of the US, you are considered a ‘tax resident’ and are liable for taxes, even if you are absent from the US for an extended period of time. You must therefore report all of your earnings to the US government, even if you have earned the money outside the US. (Please note that even if you have left the US with the intention of giving up your status as a legal permanent resident, you are liable to pay US taxes until you receive official notice from USCIS that such status has been terminated) Green card holders must file Form 1040: green card holders who commit a tax crime may be deported.
Other Taxes
In addition to the taxes you pay out of your salary, you will also pay a sales tax when you purchase any number of items. The amount of this tax depends upon the item, as well as where you live. For example, in an effort to reduce smoking, the state of New York has affixed a high sales tax on cigarettes. You will also pay taxes when you purchase alcohol, food, and books. For the last few years, New Yorkers have not had to pay sales tax on clothes and shoes that cost under $110. But you will pay taxes on any real estate you own and services you receive, such as electric and cable television in your apartment, even your cellular phone bill.
Individual states, and cities, also levy their own taxes: if you live or work in New York City, you can expect to pay federal, state, and city taxes (subject to your status in the country). Taxes will be deducted directly from your pay check; the amount depends on what filing status you choose when filling out your initial paperwork as you start your job.
Each year, by April 15th, you must file a tax return with the Internal Revenue Service (IRS). Your tax return is a collection of forms in which you submit proof of your earnings from the previous year, as well as a list of any assets you have.
Your accountant will then assess whether or not you have overpaid what you owe the federal and state governments. If you have overpaid, you will be refunded the excess amount from the US government and/or the state in which you live. If you have underpaid your taxes, you will have to pay the government the difference. (If you cannot afford to pay the entire amount at once, the IRS will usually allow you to make a reasonable payment each month.) Please be aware that neglecting or evading paying your taxes can lead to financial penalties, and in some cases, a prison sentence.
There are many deductions that you may be eligible for when filing your tax return. If you have donated to a charity, for example, or if you own property, you may be eligible to a deduction in taxes. Also, the amount of money you earn determines the ‘tax bracket’ you fall in, and that may also determine the rate at which you pay your taxes. This is an extremely complicated area of law, and it is best explored with the help of an accountant or tax attorney.
If you are a legal permanent resident of the US, you are considered a ‘tax resident’ and are liable for taxes, even if you are absent from the US for an extended period of time. You must therefore report all of your earnings to the US government, even if you have earned the money outside the US. (Please note that even if you have left the US with the intention of giving up your status as a legal permanent resident, you are liable to pay US taxes until you receive official notice from USCIS that such status has been terminated) Green card holders must file Form 1040: green card holders who commit a tax crime may be deported.
Other Taxes
In addition to the taxes you pay out of your salary, you will also pay a sales tax when you purchase any number of items. The amount of this tax depends upon the item, as well as where you live. For example, in an effort to reduce smoking, the state of New York has affixed a high sales tax on cigarettes. You will also pay taxes when you purchase alcohol, food, and books. For the last few years, New Yorkers have not had to pay sales tax on clothes and shoes that cost under $110. But you will pay taxes on any real estate you own and services you receive, such as electric and cable television in your apartment, even your cellular phone bill.
