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pilib | 15 years ago

I'm from Europe too. There are some specifics, but you can look at Wikipedia and find calculators online that explain what is deducted from gross income.

You have social security, medicare, state and federal income tax.

You should take into account that some parts of the US are more expensive than others, and that state income tax is not the same for every state. Also, 401k (pension plans) and some other types of savings, investments are deductible from the taxes.

It all depends on who you live with, do you have children, etc.

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antirez|15 years ago

Thanks for the information, one of the most interesting thing for me is if in most states in US you can deduct taxes if you buy normal things, like a car, a computer, and so forth. In Italy everybody cites the US as example of how taxes should be payed (at least about the general model: everybody pays but less, if you don't pay: huge troubles). One if this dogma about the US system is that you can deduce everything you spend more or less.

troydavis|15 years ago

This is inaccurate. The things you list (car, computer, other consumer purchases) are not personal deductions under the US tax system.

Relatively few personal purchases are deductible. The most heavily used personal deduction is mortgage interest (interest, not principal). Otherwise most personal deductions are things like tuition, major healthcare expenses, tax paid elsewhere (sales, property), and alimony payments.

And for a majority of Americans, none of these things actually appear on their tax return. Only 41% of American taxpayers file a return listing the deductions above ("itemize"), usually because they carry a mortgage.

The other 59% just take a single deduction ("standard deduction") of about $5800 per adult (http://en.wikipedia.org/wiki/Standard_deduction).

Finally, if someone found legitimate ways to deduct the things you listed (for example, they were unreimbursed business expenses), they would run into the Alternative Minimum Tax (AMT). AMT is a floor on the percent of income which must be paid as tax. In calculating AMT, most deductions get ignored (and it ignores one's effective tax rate in other years).

pilib|15 years ago

I feel your pain. I live in south-eastern Europe, and it is pretty much the same system here as in Italy, with an exception of that is isn't working as advertised :).

kacper|15 years ago

In Poland only companies can deduct tax from most of their tools/hardware/software. The end-users can't do nothing and always pay the maximum value.