Tax Entertainment
I hope I don’t lose too many of you here, but I want to talk about the exciting issue of tax! When we discuss having the new baby and tell people when it is due, here in America we have had pretty much the same response and that is that we should hope and pray that the baby comes a week early. The reason? Well the baby would be born in 2006 and therefore would be tax deductible for 2006.
If we have our new girl in 2006, even if she is born on 31 December we can use her to deduct some tax that we have to pay for the entire year. Coming from a system where all my tax was taken out at source on a pay as you earn scheme this is really different to me. Each year Jen has to sit down and calculate how much tax she has paid and how much tax she should have paid. For the last couple of years she has got a tax rebate because she has paid too much. This is what happens at the moment; I get paid weekly, and each week my employer withholds money. So far just like the UK, but the difference is, come March I can then sit down and claim money back from the amount I paid in tax. One thing is a new dependant (child, spouse etc) another is if you own a house you can deduct your mortgage from the amount of tax you have to pay (not if you rent as they want to encourage people to buy houses). I have even been told that I could deduct any money that I spent when I was trying to find a job.
If the baby is born in 2007 then we cannot deduct for 2006 and so will have to wait until March 2008 to claim money back. I feel slightly uncomfortable that everyone here is rooting for an early baby for financial reasons. I’m sure they mean well.
The other strange thing about tax here is sales tax. This is similar to VAT, but where as VAT is the same across the whole of the UK and is already included in the price of our goods, here sales tax can vary from, State to State, County to County and even from City to City within the same county. Oregon has no sales tax. California and the rest of the states do. Sacramento’s sales tax is around 8 or 9% (I think) but this extra money is added on at the till. So a t-shirt can be on sale for $9.99 and there will be huge signs telling you this, but once you get to the checkout counter they will scan it and then add the sales tax and so it will end up costing you around $10.79. I have been caught out on couple of occasions where I have had the exact change for an item only to be charged a higher price because I have forgotten that sales tax had not yet been included in the price.
If we have our new girl in 2006, even if she is born on 31 December we can use her to deduct some tax that we have to pay for the entire year. Coming from a system where all my tax was taken out at source on a pay as you earn scheme this is really different to me. Each year Jen has to sit down and calculate how much tax she has paid and how much tax she should have paid. For the last couple of years she has got a tax rebate because she has paid too much. This is what happens at the moment; I get paid weekly, and each week my employer withholds money. So far just like the UK, but the difference is, come March I can then sit down and claim money back from the amount I paid in tax. One thing is a new dependant (child, spouse etc) another is if you own a house you can deduct your mortgage from the amount of tax you have to pay (not if you rent as they want to encourage people to buy houses). I have even been told that I could deduct any money that I spent when I was trying to find a job.
If the baby is born in 2007 then we cannot deduct for 2006 and so will have to wait until March 2008 to claim money back. I feel slightly uncomfortable that everyone here is rooting for an early baby for financial reasons. I’m sure they mean well.
The other strange thing about tax here is sales tax. This is similar to VAT, but where as VAT is the same across the whole of the UK and is already included in the price of our goods, here sales tax can vary from, State to State, County to County and even from City to City within the same county. Oregon has no sales tax. California and the rest of the states do. Sacramento’s sales tax is around 8 or 9% (I think) but this extra money is added on at the till. So a t-shirt can be on sale for $9.99 and there will be huge signs telling you this, but once you get to the checkout counter they will scan it and then add the sales tax and so it will end up costing you around $10.79. I have been caught out on couple of occasions where I have had the exact change for an item only to be charged a higher price because I have forgotten that sales tax had not yet been included in the price.
posted by Nick at 11:56 AM
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