America has a city, state, and federal tax system. Tax is deducted from employees pay directly depending on your job and rate of pay. The http://www.irs.gov/
is responsible for monitoring taxes and performs audits to assure that tax returns are being appropriately paid.
Some of this tax may be rebated, or more tax may be required, in an annual
accounting done by the citizens with a due date of April 15th. Large firms like
can help citizens fill out forms on-line or in-person to determine how much
taxes are owed or to be refunded. If you do not have stocks, pension plans,
or other investments filing your own tax return is fairly simple and it is cheapest
to complete by yourself on-line. If your return is more complicated, hiring
an accountant or tax specialist to go through the paper work may end up saving
Some local money managers include:
Foreigners are also taxed as anyone else living in the United States if they are a permanent resident, have a green card, or if they live in the United States on average at least 122 days over 3 years. Most countries have formed a partnership with the United States to insure that their ex-patriots are not doubly taxed, but check with your own country to confirm that your taxes are paid appropriately. For more information on taxes as a
For 2007, the Federal tax brackets for a single (unmarried) person were:
10%: from $0 to $7,825
15%: from $7,826 to $31,850
25%: from $31,851 to $77,100
28%: from $77,101 to $160,850
33%: from $160,851 to $349,700
35%: $349,701 and above
This applies only to amounts above $8,750 (standard deduction of $5,350 plus the one personal exemption of $3,400) for an individual. For example, a single individual would actually pay 0% on the first $8,750 of income, 10% on the amount of income between $8,751 and $16,575, 15% on the amount of income between $16,576 and $40,600, 25% on the amount of income between $40,601 and $85,850, and so on.
For a quick glossary of terms:
Gross Salary is the amount your employer pays you
W-2 wages are the wages that appear on the employee's W-2 issued by his employer each year in January. A copy of the W-2 is sent to the Internal Revenue Service (IRS). It is the Gross Salary less any contributions to pre-tax plans. The W-2 form also shows the amount withheld by the employer for federal income tax.
W-2 Wages = Gross Salary less (contributions to employer retirement plan) less (contributions to employer health plan) less (contributions to some other employer plans)
Total Income is the sum of all taxable income, including the W-2 wages. Almost all income is taxable.
Adjusted Gross Income (AGI) is Total Income less some specific allowed deductions. Such as; alimony paid (income to the recipient), permitted moving expenses, self-employed retirement program, student loan interest, etc.
Itemized Deductions are other specific deductions such as; mortgage interest on a home, state income taxes or sales taxes, local property taxes, charitable contributions, state income tax withheld, etc.
Standard Deduction is a sort of minimum Itemized Deduction. If you add up all your itemized Deductions and it is less than the Standard Deduction you take the Standard Deduction. In 2007 this was $5,350 for those filing individually and $10,700 for married filing jointly.
Personal Exemption is a tax exemption in which the taxpayer can deduct an amount from their gross income for each dependent they can claim. It was $3,400 in 2007.
Local government is funded by local taxes such as property taxes. Additional taxes like sales tax and use taxes are also used. In California, seeds, bulbs, starter plants and trees obtained from a garden center are taxed if adjudged for decorative purposes while plants for food production are untaxed, as is food in California. California imposes "sin taxes" like most US States in which products
like cigarettes and alcohol are taxed higher then other products.
California levies a 9.3% maximum variable rate income tax, with 6 tax brackets (which are the divisions at which tax rates change, essentially a cutoff values for taxable income.
California's combined state, county and local sales tax rate is from 7.25 to 8.75%.
The Los Angeles County Property Tax page offers a diagram to explain how the property tax system works http://www.lacountypropertytax.com/portal/contactus/taxsystem.aspx.
For more information about taxes in Los Angeles, the city's department of finance offers aid: http://www.lacity.org/finance/
State sales tax rate: 7.25% (food and prescription drugs are exempt)
Local income tax rate: None
Local sales tax rate: 1.25%
Economic Information: Los Angeles Area Chamber of Commerce, 350 South Bixel Street, PO Box 3696, Los Angeles, CA 90051-1696; telephone (213)580-7500; fax (213)580-7511
For information on property taxes or anything not covered here go to LA's county assessor site.