US Taxes – What You Should Know as an Immigrant

It’s important to understand the basics of the Tax System in the USA. Difference between Federal Income Tax and State Income Tax. Pros and Cons and why you have to file every year a Tax Return to the Internal Revenue Service also known as IRS.

hello everybody and welcome back to another exciting uh episode and today I’m talking about income tax in the united states if you’re of course interested in moving to the united states then many many times I got this question like bernard you know having a business in the united states is it better because of tax purposes or if you have a full-time job is it better than in my home country.

well, first of all, it depends on in what specific country you are currently living in and then I would be able to compare it to your specific situation but in general, I cannot do that because everybody has a completely different situation you might be in Europe and you would like to immigrate or you might be somewhere in Asia in from India to wherever right

so I can focus literally on the facts of the tax system here in the united states and why i believe that it’s actually you know compared to many many other countries uh pretty good but of course we all suffer from paying too much like on taxes and we all would love to have absolute zero taxes right

so that being said but let’s get started first of all you have in the united states and you might be aware of this so like you also might be familiar with this in your home country it’s so-called federal tax income that means no matter where you live in the united states the so-called fat tax federal tax income is global.

the internal revenue service is also known as IRS is basically the treasury of all this and you know you kind of like have to file once a year a tax return and if you do so then you will be evaluated if you have to pay more taxes or fewer taxes, in general, it is a progressive tax system what does this mean that basically means when you have a specific income those numbers are changing every year of course

then you know you will be taxed for the first ten thousand dollars maybe there’s zero or one percent than from ten to twenty thousand dollars you will be taxed like three percent five percent from twenty-two to thirty thousand whatever those uh progressives siloed structure uh tax you know collections are this is what you’re going to pay but keep in mind

if you’re not familiar with the progressive tax system I would definitely encourage you to dive into this a little bit more and you know to pull out the calculations uh the calculator and make the math because most of the time it’s misunderstood and people say wait a minute if I make let’s say over two hundred thousand dollars a year then I will be taxed fifty percent of my income this is not true this is absolutely not true

because it’s a progressive tax system and that has those the ladder system right where you like pay only for a specific portion for a specific amount a specific percentage of income so this is the so-called federal tax now, in my opinion, i have to say if I compare it to my home country it is much much better and a lot of people just from the federal tax return um system always told me when i lived in Austria like also have been working in Munich in Germany like you’re not like you know the united states is crazy right

but so to speak look um our tax system seems also to be crazy so what is actually really better at the end you have pros and cons definitely because you have to understand that you know the the taxation in the united states seems to be just from the income tax and I’m talking here literally about income tax um seems to be for you as a pers as a person seems to be just like better you know what i mean by better it i basically can say it is less money you have to pay so taxes are less

if I compare it for example with Austria no question about it but then you also need to you need to consider that the taxation in Australia is for instance completely different because not just from the progressive system is literally the same but there is of course also the social security benefits you have the health care system that is a big block um and also for your retirement funds etc

and that’s something you don’t really have here in the united states yes there’s also a very small fraction of social security you need to pay and you know but that is not really how you could potentially compare the system in for example from my home country right so but what does this mean that also means that of course when it comes to health care

you also need to take care for your own premium or for your own private health insurance that comes on top of it and either way you pay it for yourself or you have a sponsor and you are employed and you have a group insurance and the company is also paying a huge portion of part of your portion of that premium so but i don’t want to get into insurance

that’s a completely different chapter there’s so many other stuff i want to stay at the taxes and so yes in general i would say that the federal tax income is not as bad as a lot of people think that the united states is um i can say though if i compare it to other countries so now but that is not everything now you might scratch your head and you might say wait wait what what what are you saying like so tonight it gets really very interesting

because the next thing I would like to discuss with you and I would like to explain to you is now it can be that you have an additional income tax in the united states but that depends on where you live yes so people like usually you know are in shock and they say like what are you talking about I thought like there is one federal income tax and that’s it nope it isn’t so you have to understand America is so big the united states is

so big and each state has also different taxation so and each state is treating this by themselves they basically do this on their own and every state has here big differences now when it comes to income tax so this is what you have to understand so yes you have first the federal tax and then depending uh in which state you’re living you have also state income tax and that state income tax you know is also a significant amount you have to pay and now it depends on in which uh state you live for instance like me I live in California the state income tax in California is pretty high um you know

but here comes the good news and this is also the big wow effect for a lot of people especially if you’re interested also like in freelance work or if you are going to build your own company etc there are states in the united states and they don’t have any state income tax haha

so that is good for you if you’re working in those specific states because there is no more additional tax payment for you to do and there’s also no more tax return for you to do so i thought also when i first moved to the united states that’s kind of like very interesting and good to know because you know depending on your reason your real reason you would like to move to the united states and immigrate to the united states

you might also consider that i have been talking to a lot of people who are interested in building a company in the united states just from a business perspective of you and of course then it’s very you know attractive for companies to settle in a state where you don’t have any additional you know for example like state income tax uh as long as you have like i would say a small LLC or something like this and you are just the this

uh the primary owner of this but it has, of course, a significant impact on your income now you know I personally i live in most likely the highest state income tax states and that is California, and people also say to me bernard you must be nuts then why are you living when we look at those numbers actually in California or whatever look that has multiple reasons you know that I lived in many other states

I lived like in North Carolina in South Carolina in torture uh in texas in Detroit in Washington Detroit in Michigan in Washington you know and so on and many many many other states in Oregon and the list goes on but you know for me I have my own reason why I live also in California why I moved back to California there is like the technology hub silicon valley tech industry is very strong here and that’s what I love doing

so that’s why I’m here and yes of course I mean if you make good money then you also pay a little bit more taxes right so that’s how the system is usually built and that’s what you should consider but in general I think um even if a lot of people always like to complain about it I’m very thankful I’m very grateful I am very grateful what this country also offered me so far and I hope it will even continue and I only can say the best about it and can say like for me

uh it worked out for me it’s something like I also chose and I feel like yes you always have pros and cons and you will and might also always find something, uh you’re able to complain and you know basically say oh I like that this is not good right but anyways I hope that this little overview helps you also a little bit understanding it a little bit better I would say in general look into the progressive uh tax system for sure

and then if i post those a link here below where you can find out a little bit more information and also look at all the different states and you know see like what specific state has on top of the federal income tax also state income tax or they might have no state income tax like taxes for example or Florida right so I hope also this was a very quick one and um but nevertheless like the information I guess uh was there because a lot of people always ask me

I am confused bernard with how is it going with the taxes and I don’t understand this why are people talking about so much and what’s the difference between for example Florida or California and so on and I hope I was able to clarify this so if you would like to know more information if you want to dive a little bit deeper

if you would like to know how to move to the united states quickly if you are interested in finding a job changing your life leaving the country you’re working right now and you would like to pick up a job in the united states how to find a sponsorship what specific visa categories

you can pick and so on just follow me either subscribe here on my youtube channel or go to my website again that’s and you will find plenty of options there also to subscribe to my podcast which I’m going to distribute on all different kind of platforms no matter if it’s an iPhone or android you can just click and follow and listen to all the good stuff

And hopefully, I can help you also with my you know experience and my knowledge uh when I was immigrating to the united states of America years ago with my entire family and my three little kids and that being said

I wish you already all the best and hope to see you soon in my next video and you know talk to you soon also in my next podcast etc and if you have any questions please feel free to uh post a question below the video and I will like always try to answer your questions as good as possible that being said all the best and good luck and stay for sure healthy that’s the most important all the best until later take care bye bye