usa

US Government shutdown

by Admin

I’m sure most people will have heard of the shutdown of the US Government which started on 1st October, due to a disagreement about whether or not to raise the “debt ceiling” (in short, the amount of money the government can borrow to pay for things it has already agreed to pay for). As a result of the shutdown a large number of government employees are on unpaid leave or working reduced hours and much government work is not being done.

One impact of this shutdown which may affect British tourists is that a large number of attractions are federally funded – that is, they are operated by the central US Government. An example of this is the National Park Service, which runs National Parks around the country. Since the shutdown began, all National Parks have been closed, preventing tourists from being able to visit. Some of these are what you might expect “Parks” to be, like the natural beauty at Yosemite, but others are famous monuments like the Statue of Liberty. Tourists are finding that even if they bought a ticket before the shutdown, on scheduled tours for places like the island of Alcatraz or Pearl Harbor, they have not been able to make the visit as planned.

For those who have booked a short holiday to the States, waiting until the shutdown reaches its conclusion and the parks reopen is not an option. If you find yourself in such a position, you can investigate other tourist attractions which may still be open. For example, while National Parks are closed, State Parks (those operated by the state they are in, rather than by the central government) remain open. I spoke to one couple who had planned to see the giant Californian redwoods at Muir Woods National Park – with the park closed they had to make new plans but were able to go instead to Armstrong Woods State Natural Reserve, which was open as usual, and see the trees they had hoped to see!

Tags: , , , , , ,

Friday, October 11th, 2013 Economy, Foreign Currency No Comments

None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

Updates for USA tax changes

by Admin

Over the New Year period I was in the USA, watching with interest as the government there tried to resolve their tax and spending problem that was called the “fiscal cliff”. This cliff was due to the fact that many of their tax laws were due to expire at the end of 2012 and they had not yet agreed how to proceed for 2013. Tax years in the USA are the same as calendar years, starting on 1st January, so it was important that they reached a conclusion over the holiday period.

There is a US version of The Salary Calculator, and so I needed to know how to update it for 2013. Unfortunately, when the answer came, it wasn’t simple and it wasn’t very clear, either. As well as changes to some of the tax rates (including an increase for the top rate from 35% to 39.6%), there was an additional Medicare (health care) tax of 0.9% on those earning over $200,000 ($250,000 for married couples). There was also the re-introduction of old regulations which reduce the amount you can deduct before tax – Personal Exemption Phaseout (PEP) and “Pease” (reduction of pre-tax deductions named after the congressman who created it). PEP is similar to the personal allowance reduction which occurs in UK tax if you earn over £100,000 and applies to those earning more than $250,000 ($300,000 for married couples). Pease reduces pre-tax deductions such as charitable giving for those earning more than these same thresholds. The overall effect is to increase income tax revenue, largely from the upper middle class and the wealthy.

As well as applying these tax changes to The Salary Calculator, I also had to include something called Alternative Minimum Tax, which is used to make sure that taxpayers don’t use so many deductions and loopholes to reduce their tax burden below a certain percentage of their income. This had been in effect for a few years but was rising in prominence and the number of taxpayers it affects, so I was overdue in adding it.

All of this led to a significant amount of work, not least in finding reliable figures for the thresholds and rates which apply to all of these for 2013. Even though I believe I have found the latest ones, the US government is meeting again later in the year to discuss tax plans again, and it is possible that these figures or rules may even be changed again – if this happens I will update the US Salary Calculator with the latest information. To learn more about the tax calculations, see this page about the US Salary Calculator.

Tags: , , , , , ,

US tax can be complicated for same-sex couples

by Admin

I was in the USA recently and was interested to see an article in the newspaper USA Today reporting that same-sex couples sometimes face extra difficulties when it comes to paying their taxes. In the US, although there is an equivalent to PAYE (where your employer deducts your tax for you), almost all taxpayers complete a tax return detailing their income, allowable deductions, and the tax they should pay. This might be more or less than what your employer deducted, so you may have to pay the difference or request a refund.

The problem for same-sex couples occurs because of two details of the American tax / legal system. Firstly, married couples can file a joint tax return, rather than filing two separate returns. Filing a return can be a laborious process, and sometimes it is necessary to pay a tax consultant to complete it for you, so filing only one can save time and money. Sometimes, filing a joint return actually leads to less tax being owed, an obvious benefit. Secondly, same-sex marriage is not recognised by the federal government (i.e. the country) but is recognised by some states (e.g. Massachusetts). What this all adds up to is same-sex couples having to file different tax returns at the state and federal levels – a joint return for their state (if it allows them to submit joint returns) and separate returns for the federal government. This can cost couples more in tax consultant fees (as there are more forms to submit) and can cost them more in tax as they miss out on the tax benefits of being a married couple.

At the moment it doesn’t appear that this problem is going to go away – not soon, in any case. You can learn more about US Federal Income Tax on the US Salary Calculator.

Tags: , , , , , ,

Sunday, February 26th, 2012 Foreign Currency, Income Tax No Comments

Sponsored Links

Close X

This website uses cookies - for more information, please click here.