Fact check. There IS a level of income below which you do NOT pay tax in the US. Otherwise very interesting presentation of the differences. I'm a Briton living in the U.S. and I think it would have helped to explain "withholding tax" which is very similar to P.A.Y.E. except that if you are in employment, all your income is taxed so you get a refund of overpaid tax (for personal allowance etc that you paid tax on) when you submit your return each year.

@TheDaltonmichaels

4 жыл бұрын

And if you live below a certain income level Americans typically qualify for federal and state benefits that end up paying more out than the individual pays in assuming they are below whatever level that may be varying on the state. but its up to the individual to apply for said benefits and if they dont then they may be paying in more than receiving in benefits.

@TheBigPig66

4 жыл бұрын

If you are willing to trust Forbes, single under 65 making less than $12k you don't have to file. Married Filing Jointly is $24k.

@Bananarama67

4 жыл бұрын

@@TheBigPig66 You don't have to "trust" Forbes, that's just what the tax code says

@XtremeCookiez

4 жыл бұрын

@@TheBigPig66 $12k is the standard deductible. Basically, if you have $12,000 in income you can deduct 12k, so it's the same as if you made $0 income.

@nrprise

4 жыл бұрын

Good catch. In the US, your standard deduction will refund your payroll withholding tax (similar to P.A.Y.E) if you make below the standard deduction amount (meaning you should owe no federal income tax). If you have kids, you also get credits for them so you can make a bit more than standard deduction amount before you wouldn't get all of your payroll withholding tax refunded. Then there is the Earned Income Credit (specifically designed to actually give money to people below certain income levels even if they paid no taxes especially if they have kids). With EIC, it's very possible to get money in tax return that you never paid in. However, it's worth noting that all income (up to a certain amount) is subject to a flat FICA tax (currently 7.65%) that goes towards social security benefits (money you get paid when older) and medicare (government healthcare program for older individuals) so all income earners pay that. Higher income earners also pay an additional medicare tax as well. However, the EIC mentioned above can, depending on qualifying children and income level, easily offset even this tax. I hope they will update video noting this incorrect fact.

The time and effort required for tax filing can be significant. Are there ways to simplify the tax filing process for my situation, potentially freeing up more time to focus on managing my investments?

@HildaBennet

Ай бұрын

Three words; Cloud-based accounting. Cloud. Based accounting tools automate a lot of the data entry and filing BS. This frees up valuable time for you to focus on managing your investments and growing your wealth.

@JosephineKenney

Ай бұрын

Generally, investing requires higher knowledge. For this reason, It's important to have a solid support structure (financial consultant) to guide you through especially in asset picking. I operate with a consultant who partners with a licensed wealth management firm. For the record, the experience has been the best for my finance. She made me financially stable investing through her help, now I earn on a monthly basis through her passive income strategy... So I'd advise you do get a good investment advisor for yourself.

@JosephineKenney

Ай бұрын

Generally, investing requires higher knowledge. For this reason, It's important to have a solid support structure (financial consultant) to guide you through especially in asset picking. I operate with a consultant who partners with a licensed wealth management firm. For the record, the experience has been the best for my finance. She made me financially stable investing through her help, now I earn on a monthly basis through her passive income strategy... So I'd advise you do get a good investment advisor for yourself.

@JosephineKenney

Ай бұрын

It's recommended to save at least 20% of your income in a 401k. Sonya Lee Mitchell taught me to estimate how much you should save based on your age and income. I've been with her for years now and her decades of experience in the markets translate to chunks of value in so may ways! She has upscaled my portffolio and even got me reading self help books haha

@PennyBergeron-os4ch

Ай бұрын

I appreciate your advice. It's hard to find someone that's reliable. When I see how much you've made investing, I could really use your investment advisor. That is, if you don't mind sharing her information.

Learnt more about the uk tax system in 15 minutes than I have in my entire 17 years

@shannonf101

4 жыл бұрын

Sameee

@stefox5444

4 жыл бұрын

Yes it was very informative, however like everything tax related only covers a small portion of the rules. It should really be taught in schools. One key item which was wrong though, is that even employees who pay tax via PAYE can still claim extra deductions for work expenses. You must do this manually though and directly to HMRC yourself.

@amyunbeatable

4 жыл бұрын

Ste Fox Wouldn’t this be the P11D filed by the employers on expenses and benefits?

@stefox5444

4 жыл бұрын

@@amyunbeatable No not really, that form is mostly to tell HMRC of any payments which they can tax you extra on. Such as if they pay you a better car mileage allowance than is allowed under the regulations. I believe it is a p87 form, I claim a tax deduction through this for my work expenditure.

@emjenkins464

4 жыл бұрын

The WJEC had tax as a possible GCSE question, but we did it in two hours

Thanks for educating us on what we didn’t learn in school

@hlund73

4 жыл бұрын

We are let down there, no reason they couldn't cover real examples in maths, foe example. Particularly to encourage people to become self employed.

@laurajanesalamon74

4 жыл бұрын

I go to a welsh school and there are tax questions on our maths exams

@MIKECHENDERSON1

4 жыл бұрын

@@hlund73 HMRC will actually visit schools and do a presentation to the kids about how the tax system works. They just need to be invited.

@sabrina-xm8mz

4 жыл бұрын

Didn’t youse have PD? (Personal Development)

@daniellej5470

4 жыл бұрын

As an English person we didn’t learn this is school,not sure what it’s like in other countries

When I've heard that in US the price of the item in the store is not the actual price of the item at the register blew my mind! How an earth do you people shop? Is absolutely ridiculous

@bigchezzy8989

4 жыл бұрын

That's something I don't get. Though you do end up spending the same amount so it doesn't really matter. It's probably to do with importing across state lines

@evan

4 жыл бұрын

That's the next video!

@ButterflySimmer

4 жыл бұрын

@@bigchezzy8989 yeah. We included tax to the final price of the product.

@anca6702

4 жыл бұрын

I can't understand how shopping can be a pleasant experience when you don't know exactly how much the product costs

@Carina5707

4 жыл бұрын

Because taxes vary per county and can change periodically. I live in a richer county, and we voted in the last election to increase sales tax and gas tax to widen the local freeway because traffic had gotten so bad. So if you go just one county over, the gas prices drop like 30-40 cents. Gas tax is included in the price. Anything else is not. It would be much much MUCH nicer if it was, but you really just estimate it in your head as you shop. Or, you're just so used to it that it doesn't really phase you.

UK Accountant here, in the UK a PAYE employee can choose to file a return and claim all those tasty deductions if they want to.

@stefox5444

4 жыл бұрын

👏👏

@Chayat0freak

4 жыл бұрын

In practice, though the HMRC want to cut back on the number of people filing as much as possible so if you were a PAYE employee and submitted a return which included uniform washing costs, some travel costs and maybe some home-office costs and it was something like £500 for the year HMRC would just adjust your tax code to include it all ongoing and just tell you to tell them if it ever changed. So in subsequent years, you'd be back to not having to file anything.

@laurencewill912

4 жыл бұрын

If the expenses are under £2,500 you just need to send in a p87

@alexwright4930

4 жыл бұрын

Thought you had to say that you're at least a sole trader to submit a return?

@seekar9962

4 жыл бұрын

@@laurencewill912 yeah £2500 is the limit HMRC has to put in expenses for employed people. Such as profession subscriptions etc. Over that amount and hello self assessment 😂. Depending on your tax bracket also depends on what you get back. 20% tax payers only get 20% back from that £2500.

While you are taxed at the 10%, it’s all refunded if you earn less than $12,200 (2019 tax year) due to the standard deduction when it comes to filing. Tax liability and tax brackets are not the same.

@missqueeniestea

4 жыл бұрын

koue89 thank you! This bothered me so much when he talked about it!

@iofbeholder

4 жыл бұрын

Exactly. Ty.

@hells-bells900

4 жыл бұрын

When I worked part time and did one shift more than normal I would get taxed like £2 - £13 and then the week after I'd get it back when theyd realise hey wait she still earns under the taxable amount (by over half I must add) we better give it back. Happened most weeks if I got given another shift more than normal. I've been meaning to ring them since last year, I kept my part time job when I found a full time job so my tax was split. I dont think they changed it back for the 6 months before April (nice little christmas bonus if not).

@ChristopherPuzey

4 жыл бұрын

Devin Caranza but those aren’t income tax.

@brmolnar

4 жыл бұрын

@@ChristopherPuzey In the UK, what we in the US would pay as 'Medicare', 'Social Security', 'Unemployment', etc, is all covered in the UK income tax. There is no separate line for each. If you want a more apples to apples, you do need to mention this.

'luke is the only one knowlagable about tax' That says something about our education system

@tensemurm5924

4 жыл бұрын

But also about the individuals. We live in an age where information can be found in seconds. People complain about not understanding things because they weren't taught it in school, but then also put no effort into educating themselves.

@TheGomezdotcom

4 жыл бұрын

Knowledgeable*, that also says quite a lot about our education x

@emmahigham2699

4 жыл бұрын

@@tensemurm5924 That's a valid point

@visitingstatue171

4 жыл бұрын

@@TheGomezdotcom 😂 i was gonna say the same thing

@funkypigeondotcom7917

4 жыл бұрын

Moonlit Waters me too 😂

Love you saying "I've always done my taxes fairly". Because if there's one thing you don't want to do when fiddling your taxes, it's admitting it over the internet!

@matthewryan4844

4 жыл бұрын

he was going to say pretty honest, but he dodged that bullet. Don't even want to suggest that something is wrong if you're broadcasting it

@ronclark9724

4 жыл бұрын

The Dems demand Trump's tax returns knowing full well the IRS have audited his returns for decades every year as he hires tax attorneys and accountants to track and keep every receipt... The Dems are fishing knowing they will sling mud at every deduction, never mind whether they were legal deductions. I recall Mitt Romney getting smeared for his 10 percent deduction for his Mormon tithe...

I never really expected anyone to do a video on this subject, but you both did very well explaining the tax systems we have in the UK. There are a couple of things I just want to clarify though. You can actually claim job related expenses (i.e a business trip, meal expenses on said trip, hotel costs on said trip) via PAYE assuming your employer hasn't reimbursed you for them in full, or under the limits that HMRC will make allowances for. But in these cases it's more a reduction in the overall tax rather then a refund of the expenses themselves. This can also carry over into your tax code (which is made up of your tax free allowance) for the following year if it's a recurring thing, this would actually give you a higher code (i.e. more tax free allowance) so you get charged less tax as a result on your payslip. Likewise if you have a benefit in kind (i.e. a company car) this can put into your code to reduce the tax free allowance to charge the tax due on the company car via your payslip. Now the good news is you should be able to either call the tax office or use their webchat to make these declarations, to have the current year and the last four years reviewed. If you go over a certain limit however you may need to file a self assessment tax return, which is what Luke needs to file as a self employed person, but unlike Luke you would be completing the employment section, along with the expenses. One other thing I have to point out, as far as income tax is concerned, whether you are self employed or PAYE or working in any other version of income tax (such as the Construction Industry Scheme), you are responsible for making sure you are paying the correct amount of tax. In PAYE, all your employers knows is what your tax code is and what tax should be charged by it on your income. They have no knowledge of what goes into your tax code, and they have no right to know either. But if your code is wrong the tax liabilities are still yours. So please make sure you check any tax code notices you have from HMRC and that code is being used on payslips you get after any code changes. Also just be aware, if you get an email claiming to be from HMRC telling you your due an income tax refund, AND it tells you how much it is and gives you a link to click, this is a scam email, a phishing scheme to get your bank details. HMRC does send emails about refunds but they won't tell you the amount or give you any links to click. That was a lot more information then I thought I'd be adding to this :D

@johnmccallum8512

4 жыл бұрын

Re email about tax refund.The Inland Revenue are more likely to send a letter to your home address if you owe money to them or if they owe money to you , not a very likely situation.

@NoFormalTraining

4 жыл бұрын

@@johnmccallum8512 Your more likely to get the email if you already have an online account with HMRC and have set everything to get messages online rather then on paper. A bit like banks prefer you to get your statements online through an online account rather then posting it to you.

I'm just happy I live in a country where I only have to spend around 2 minutes per year even thinking about my taxes. Everything is just handled automatically.

@m1sh474

4 жыл бұрын

@Chris Behne really?

@kenneyp1

4 жыл бұрын

Keep in the heard sheep.

@timsgilable

4 жыл бұрын

Yes nothing better than the government making it easy to not think about how much money they take from you.

@farmkidspm

4 жыл бұрын

The problem with that is that you have no idea what you're paying and you never really notice changes in taxes as long as the changes are small. It's great for the government because they can take your money and you don't complain. You don't care what the government spends because you never see what they're taking from you. If you paid the same amount, but you had to write a check every month, you would pay attention to what the government is doing and how they're spending your money. It would change how you voted. Automatic tax payments such as PAYE or withholding are promoted as a matter of convenience, but they're really a way for the government to take your money before you ever see it so you never feel like it was your money and you don't care what they do with it.

@timsgilable

4 жыл бұрын

@@blitzwing1 I guarantee you my healthcare is better than whatever country you are from. Access to better doctors better technology better procedures. We definitely need reform, but I'd much rather have move to competitive capitalist approach than socialized medicine.

I don’t get why Americans who don’t live in the US still have to pay US taxes

@joannakennedy6005

4 жыл бұрын

Me either!

@ChaosTherum

4 жыл бұрын

To be fair we do have the backing of the US if something goes wrong in that country. The US has a long history of helping citizens out of spotty situations over seas.

@gizmo5601

4 жыл бұрын

The US is one of only 4 countries (Others, Hungary, Eritrea, Myanmar) that taxes its citizens and resident aliens (green card holders) worldwide income and gains regardless of where they live or work. Most other countries tax individuals based on their residency, not citizenship. Being a dual UK/US citizen living in the UK, all of my worldwide income is subject to UK tax and also USA tax. Due to tax treaties I generally get a credit against my US tax for UK tax paid so avoiding double taxation. It is a pain, completing a tax return for each country, with different tax years (US Dec 31st, UK Apr 5th) and tax rules.

@gizmo5601

4 жыл бұрын

ChaosTherum I have never heard that the US State Dept diplomats are any more supportive of US citizens abroad than other developed countries diplomatic support for its citizens.

@rhysmuir

4 жыл бұрын

US tax is based on citizenship not residency like all normal countries

Interesting video! In the US, if your total income is LESS than the standard deduction (roughly $12,000), then you are not required to file a tax return or pay any income taxes. Just an example if you make $20k a year, your Taxable income would be ~$8k. And you'd have to pay 10% on that $8,000, not the whole $20k.

I learnt more about how my taxes work in this video than I ever did in school

Also in the uk if you win the lottery you cant be taxed on it.

@Chilukar

4 жыл бұрын

Its kind of the opposite. In the uk you pay the tax when you buy the ticket. In the US, I think it is only the winners that pay the tax.

@medleyshift1325

4 жыл бұрын

@@Chilukar In the US if you make a bunch of money by winning the lottery. It's income and you need to pay taxes. That's it. Why wouldn't you pay taxes on the money you make. The American system is basically designed to make you figure out how much you made, how much you lost/the government wanted you to spend on, and taxing the difference. It's just a headache, because rich people.

@Chilukar

4 жыл бұрын

@@medleyshift1325 in the uk they do it the other way around. Everyone pays a tax on the lottery ticket they buy but the prize is what you receive after winning.

@alexwright4930

4 жыл бұрын

So that's why they let you take US lottery wins as an annual or monthly payment then, to reduce the income tax bill? You'd lose nearly half of a multi million pound win if it was subject to income tax, so that actually happens if you take the lump sum in America?

@medleyshift1325

4 жыл бұрын

@@alexwright4930 Yes, however the instalments are also so the states can make the payments they owe, because budgets are hard, and to protect winners from buying too much blow and hookers all at once.

7:40 With the standard deduction, this is not true. The US tax brackets are based off “taxable income” which is earned income minus deductions. The standard deduction (which is given to everyone at any income level) is $12.2k for individuals, so in essence, the first $12.2k of earned income is not taxed.

It’s ironic when you’ve just finished learning about income tax to then watch a video on income tax

@mrdefaultynoob

4 жыл бұрын

How old are you like an average I don't want your actual age??? Are you only learning about income tax

@HopeWilson1

4 жыл бұрын

I’m a year 12 doing Core Maths so you learn about income tax and national insurance

@thomassmall70

4 жыл бұрын

That's not irony, it's a coincidence.

@user-qb3tk8rs8t

4 жыл бұрын

@@mrdefaultynoob please can you tell me what you think someone's average age is vs their actual age. I'm very intrigued

@tomstech4390

4 жыл бұрын

It's not ironic or a coincidence, It's called cookies.

That shirt looks really good on Evan, green really suits you

“What a tinny little thing in a sea of crap” lol well said ☺️

I wasn't expecting to understand much in this video but I actually found it really interesting and educational! Great job!

The reason the UK has higher taxes is because health care is included in the taxes when in the US it's paid for by the consumer separately.

@Alucard-gt1zf

4 жыл бұрын

The us still gets taxed for healthcare

@Robert-cu9bm

4 жыл бұрын

romaneeconti02 By choice, not to survive.

@rtsharlotte

4 жыл бұрын

National Insurance is different to income tax. National insurance is roughly 12% per week on top of income tax

@grahamsmith9541

3 жыл бұрын

@@rtsharlotte only on earnings over £183 per week. Tax is calculated on the amount left. After National Insurance, and private pension contributions have been deducted.

@user-vd2jk7dl3p

3 жыл бұрын

We do have government healthcare and we get taxed for it. Evan never mentions it for some reason. IDK why. Our health care system is called social security and everyone pays into it. it is meant to be a safety net for the poor, disabled, and elderly. Veterans also have a government healthcare plan as well its called the VA system.

What I find shocking is that the US government spends nearly the same per person (as a % of GDP) as the U.K. government does, yet British citizens get free at the point of access healthcare and don’t have to worry about going into debt because of an illness or disability. Americans think that taxes in the US would have to rise substantially to support a national healthcare system, but it’s the American healthcare system’s gross inefficiency that makes it so expensive and so nationalisation wouldn’t cost that much more in the long run.

@AndrewBouchierUK

4 жыл бұрын

we also have lots of in-work benefits for people on relatively low incomes and claiming one of those benefits also entitles you to free dental care the US Healthcare is a complete mess but the number of states has nothing to do with why the United States doesn't have universal Healthcare

@meggiebeth3202

4 жыл бұрын

There’s no need for healthcare to be controlled by states. If healthcare were provided by federal government, it would save a lot of money and cut out the middle man. The US system is so expensive and inefficient at the moment for that very reason. We have different countries within the U.K., and different counties (“states”) within those countries. It makes no difference where you are in the country, as you’re still entitled to NHS treatment. As Andrew says, the fact that there are fifty states isn’t why there isn’t a national healthcare system in the US. People are fed misinformation about so called “socialised healthcare” (that term doesn’t even exist in the U.K. because we see our NHS as a basic human right for our citizens - it isn’t socialist) and are afraid of it. Plus, people continuously say they don’t want to pay more taxes - again, not realising that the US government already spends as much in relation to GDP on healthcare as the U.K. government does.

Sometimes I think the US government made the taxes so confusing and convoluted just to take money from poor people who can't afford help with their taxes.... =( The w4 form usually sets stuff up to have our employer send more money to the government than we actually owe, and it's up to us to declare our wages to get that money back. If you don't know what you're doing (and it's already super confusing + not taught in public school...), then you probably won't get the tax return back that you deserve... It's kind of messed up. :/

@libertasinveritas3198

4 жыл бұрын

It's waaaaay worse here in Germany.

@kpresleyut1

4 жыл бұрын

Katy Adelson you can get an 1040EZ done for free plus most poor pay nothing in tax. Cry me a river.

@briwanderz

4 жыл бұрын

turbotax let's you file for free.. and if you have an android or crapple phone you can basically scan your W2 form from your employer and it's super easy. tho they SHOULD teach this stuff in school.. at least briefly talk about it.

@markfreeman4727

Жыл бұрын

@@briwanderz nope, me and my dad use it, we get charged if we send it electronically printing it out also costs paper and ink

I have been working under PAYE most of my adult life. I was also self-employed for about 3 years. I think Income Tax in the UK is handled relatively well. The self-assessment form used to calculate for self-employed business is not that difficult to complete and there are usually notes to help. As long as an individual keeps records from the start it is easy to fill in. It used to take me under half an hour to do. Records keeping is important. Side note, there are actually things you can deduct under PAYE but they only apply under specific Legislation for very specific work groups - which means you usually need an accountant to do it for you. I only know it because I once worked as admin for a company that prepared refunds at the end of Tax Year. And to be honest, most of my Tax knowledge comes from the induction and training I had for that job. American taxes sound terrifying and filled with anxiety.

@alexwright4930

4 жыл бұрын

Yeah I've found the self assessment forms the last couple of years - first time I've filled them out - fairly straightforward. Had some foreign income to declare, and thought I had to declare some non PAYE income but apparently if it's under £1000 they don't care. And this year got a considerable lump sum tax refund in my bank account a week or two after submitting so was definitely filling it in.

Haha.. soo I may win the award for most relevant viewer here to this little niche video since I am a UK Chartered Tax Advisor and Accountant, working in International Tax which specialises in US/UK expats. Fun right?! 🤣 This video sums up the two systems really well! I may have to show it to some of my clients since I spend a lot of time saying to disgruntled UK taxpayers saying "you think that's bad, try being a US citizen!"... 🙈🤣 Other interesting things of note: 1. In the UK we get 10 months after the tax year ends to file our tax return and pay any tax liability (if we even need to do one that is- if you have no reportable income, or everything is dealt with via PAYE then no need to complete one). In the US, you get just 3 and a half months! (Unless you qualify for an extension) 2. File your tax return late in the UK? £100 late filing penalty. Late in the US? $10,000! 3. In the UK they want to deal with as little tax returns as possible so the default is that you DON'T file UNLESS you need to report income which isn't taxed at source. The US is opposite and wants a return from you no matter what. You mentioned this in your video but I don't think enough emphasis goes into how crazy this is. I have clients who are super "british".. parents, grandparents ALL BRITISH.. but!!... since mum was on holiday in US when she gave birth to child, technically they have US citizenship and so need to do US tax returns.. sometimes people don't EVER travel to US yet 50+ years later will google something and realise they should have been filing US tax returns for decades! Which obviously terrifies them. Literally the only way to stop being required to do annual returns is to formally renounce your US citizenship. It's madness! 4. The UK has fewer returns to process so once you file you get a confirmation from them they've recieved it and a little calculation of the tax you owe and instructions about how long they can legally "enquire" into your tax return etc, so people can be assured that their returns have been recieved ok, that they've calculated their tax same as HMRC, and this generally allows us to relieve some anxiety that the tax year is "done" and we can move on to worrying about the current year. The IRS have so many more tax returns filed that they don't have time for this so don't send out confirmations of your submissions. Instead, you submit, and cross your fingers that they recieve it ok, pick up everything you entered on your form correctly, and have matched your records up correctly. Then you sit back and cross your fingers. I've had clients contacted 5/6 years later to say there was a page missing from the return and if they don't resubmit in X days there will be a penalty. 🙈 Great video Evan 👍👍

@job996

4 жыл бұрын

.. very true yes. There's also an automatic extension to June for those outside the US. I was referring to the automatic position which applies to most as didn't want to go into extensions and make an already long post even longer 🤣

fun fact: if you make less than 12,500 then you don't have to file your taxes. This is if you're filing as single, the amount changes with how you file.

@AM-lg8yn

Жыл бұрын

This is how it should be so nothing special about it honestly !

A lot of the U.S info in the video is wrong. Everyone gets a standard deduction so for single people it’s 12,000 and married is 24,000. This amount is an automatic deduction, if you don’t itemize (which is what the mortgage interest is), and is not taxable.

@MrTangolizard

4 жыл бұрын

Michelle Crosby I. The U.K. the interest rate is 0.25% so mortgage interest isn’t much

As a UK accountant (I'm currently studying for my chartered) the US side is absolutely FASCINATING to me. I love learning about tax (yep I'm that person) so the differences between the 2 systems are really interesting

@timsgilable

4 жыл бұрын

Yeah they didn't really do a good job explaining the US taxes.

@psyskeptic9979

2 жыл бұрын

they get the us system wrong--taxes are much lower in th us

@mdot9551

2 жыл бұрын

US is perfect for us accountants then lol they make a killing therr

In the UK you lose £1 of your personal allowance for every £2 you earn over £100k. This means that for earnings between £100-124k the marginal rate of income tax is 60% plus 2% national insurance. Many people (including me) sacrifice money into our pension to reduce our net income to below £100k to avoid this band of very high marginal rate. However things get really complicated if your earnings creep up towards £150k because you start to lose some of your annual pension allowance (current maximum allowance is £40k per year). Many on the left of politics continually suggest that the Tory government since 2010 have introduced policies that favour the rich at the expense of the poor, but in terms of the tax system that is not the case. Those on the lowest incomes now pay almost no tax at all whereas changes to marginal rates, pension allowance and dividend tax have significantly increased the tax burden on the more well off. It is true that the benefits system for those on low incomes is less attractive than it was, but this has been offset by the minimum wage increasing far faster than the rate of inflation and the reduction in tax for those on low incomes.

@alundavies8402

3 жыл бұрын

The thing is that people who aren’t willing to work don’t happen to care about cheating other people buy telling them sad stories but if you are genuinely disabled the system is getting worse because they are encouraging people that can work to work by sanctions and stuff but I am not able to work as I am ill but that has sort of got lost in this getting lazy people out and into work

".... buuut rich people" 😂😂😂 honestly applies to so many thing here *sigh*

@badbatch974

4 жыл бұрын

That Guy that Works with Computers hahaha. Ya let’s all be poor forever. Damn those rich people. Lol

@MrRedberd

4 жыл бұрын

As if it is a choice, and there is enough room for everyone to be rich...Rich people suck, Bernie2020

@MrRedberd

4 жыл бұрын

@@crystalh450 Why, Did he lobby for a third house tax break? Should he divest himself of all worldly possessions except one bed sheet to wear as a robe? lol

@MrRedberd

4 жыл бұрын

@@crystalh450 He is going to raise his own taxes, not lower them. He didn't vote for Trump's help the wealthy tax plan. It will not be the working class paying for everything, as usual. That is the whole point. He recently bought one lake cottage, because his wife wanted somewhere to spend time with family, and I am ok with that. I think it is funny that Republicans and Democrats hold Democrats to a higher standard. lol

@starcultiniser

4 жыл бұрын

rich people feels the taxes alot more .... and they are the people getting most jobs for people

I remember MIRAS (Mortgage Interest Relief at Source IIRC). It did sting a bit when it was abolished, but all it had really done was inflate house prices (you could afford to pay more, so sellers asked for more). Every now and then a government will repeat the same mistake, i.e. they'll offer tax incentives in an effort to promote house building or help first time buyers, which invariably results in some people gaming the system, resulting in house price or related inflation.

@davidwillis7991

4 жыл бұрын

Yeah, you can end up in a mess like Australia where Sydney and Melbourne have prices like they're cities with 20 million people

9:22 income tax in the UK peaked during WW2 at 99.25%

@hlund73

4 жыл бұрын

Lots of people who whinge about tax increases have no idea how much everybody paid in what they think was the wonderful past.

@Codex7777

4 жыл бұрын

...and peaked at 94% in the US. The top rate of US income tax, remained above 70% during the entirety of the so-called 'golden era' of US capitalism . It wasn't until the 80s that it was reduced. Largely by expanding the tax base in the working and middle classes. The same thing happened in the UK. Taxes were reduced for the wealthy and increased for everyone else.

@Jane-yg3vz

4 жыл бұрын

@@Codex7777 This was only for people who made more than 200,000 a year which is almost 3 million in today's money. People back then could still support a family on one income.

@Codex7777

4 жыл бұрын

@Jane - Of course the top rate had a high threshold. Good grief! lol. Do you know how a graduated tax system works?

@Jane-yg3vz

4 жыл бұрын

@@Codex7777 My mistake. I misread your comment. Of course I know how taxes work.

I was taught about the UK tax system in year 6 but this was pretty interesting. I know most people at my secondary school have no idea about anything to do with it so I guess I was lucky.

It's not true that you cannot claim expenses as a PAYE employee. You can claim for mileage, clothes, tools as well as many other costs related to your employment. You can also claim relief on charitable donations. Edit: Also; The American exclaims "Jesus" when learning of the UK's 'crazy high' historical taxes but he might want to check into the USA's historical tax rates, at one time the top rate was 94%. Not crazy though.

In Portugal you always have to file a tax form (like in the US), but a big chunk of the form is pre-filled by the Tax Service using info they already have. Like in the UK, we have a lower tier that pays no tax, and the top tier is at 48%. For self-employed people (up to a certain income) we have an optional "simplified accountancy" system: depending on your activity, the Tax Service will simply consider that a certain percentage of your income is spent on business-related expenses and will tax you only on the remainder. E.g., if you're a personal tutor and have total income of 50,000€, they will consider 25% of that is for expenses, so you'll pay income tax on the remainder 37,500€, with no need to present invoices of the actual expenses you had.

@valeriecuan4189

Жыл бұрын

What is the threshold there where you have to file and pay tax on. Im in Spain and it's very low 5.500

@GazilionPT

Жыл бұрын

@@valeriecuan4189 Yes, you're right, there is a threshold below which you are not required to file your taxes. (So, when I said, "In Portugal you always have to file a tax form", I was not being that accurate.) That threshold is 8,500€, but there are some caveats. For example, that is only true if that income was not subject to any withholding by your employer/client; if it was, you must file a tax form so that the final calculations may be made (and there is a good chance you will receive part of it back). The dispensation also does not apply to people that benefit from alimony, nor does it apply for married couples (or civil unions) that decide to be taxed together and not individually. And some other exceptions. For those that must file a tax form, many of them are eligible for "automatic income tax", where all you have to do is clicking a button. But one thing is the threshold below which you don't have to *file* a tax form, another thing is the threshold below which you don't *pay* any income tax. Those are not the same threshold. Many people are required to file a tax form but they end up not paying any income tax (and if they pre-paid anything, e.g. their employer withhold a percentage and handed it over to the tax authority each month, they will get that money back). The threshold for actually paying varies from person to person, as it depends on your deductible expenses, personal condition (e.g. if you are disabled, or your spouse or a dependent is disabled, you end up paying less, if at all), number of people in the household, etc.

This makes so much sense! I never understood why non self-employed people in the US talked about "doing taxes". Here in Portugal it's similar to UK, you never really "do" anything.

@kaylenpeterson1773

4 жыл бұрын

There's potential way to file basic taxes that is just a postcard, but the tax companies don't want it implemented.

@7:40 Your information is absolutely incorrect. The US "tax free" amount is $12,200 by way of the "standard deduction". So if you earn $12,200, the SD will reduce you taxable income to $0. If you earned $12,201, your taxable income would be $1, which you would pay $0.10 (ten cents) tax. But even that would in reality be $0 since the IRS only works in whole dollar amounts, so that ten cent tax bill (up to 49 cents) would be rounded down to $0.

My legendary maths teacher taught us about Tax in Year 9 so that we knew how it worked!! I thought it was really smart since we don’t learn it anywhere else

Good to see Luke is still smiley and well!

The United States used to have 70%+ tax brackets before Reagan too.

@abrahemsamander3967

4 жыл бұрын

There is an argument that the rich actually payed less taxes then. There’s also a counter argument that it discouraged high incomes and led to businesses charging less prices in order to avoid higher incomes. Those are just two arguments. I think income taxes are flawed and I’d prefer a land value tax. Income is earned land is just there but that’s just my opinion.

@annasmith6090

4 жыл бұрын

Taxes on millionaires were really really high around the 1910s. This caused the number of millionaires to decrease dramatically, decreasing the amount of money the government was taking in. So it backfired a little bit. Thomas Sewell wrote a great essay about supply side economics and taxes in America. You can find it free online

@abrahemsamander3967

4 жыл бұрын

Thanks Anna. I’ve been meaning to try and read some Sowell, I’ll definitely check out the essay and tell you what I think of it.

Evan, US fed tax rules 2019, 2020 have changed so much where itemized deductions are limited or removed; most ppl take the 'standard' deduction single, married, etc.

UK tax free allowance is £12,500 for the 19/20 tax year, just letting you know :)

@evan

4 жыл бұрын

oooo

@terilyte3152

4 жыл бұрын

@@mohammedyakub3760 20% in the next bracket. Most people just pay 20% but it goes up to 40% somewhere around £47,000

@isoroxuk

4 жыл бұрын

But you pay 12% above about 9k on NI Which is effectively income tax. There’s also hidden ranges - an extra 9% student loan repayment above 27kish, child tax from 50-60k (extra 18% for two), that £12k vanishes between 100k and 120k, and the ability to transfer between spouses vanished at the higher tax bracket, meaning that an extra £1 adds £1000 on top of your tax bill.

@iainansell5930

4 жыл бұрын

@@isoroxuk NI is not really tax, its intended purpose is health insurance and state pension contributions...

@isoroxuk

4 жыл бұрын

Nope. It’s a tax aimed at workers, avoided by rich people whose income is from investments, collected by the tax man (who also taxes the employer), and it all goes into the same pot. Old people and rich people avoid it, but for everyone else it’s identical to income tax.

Wow thank you for your video today and will look out for the next one! You have so made me realise a few things tonight with listening to you both and learning more about our tax system and some benefits than I ever realised before, has made me re think some benefits of maybe, just maybe taking a leap where till now I remained unsure. Love the videos - to think found first video witih some sick guy who thought he was dying of appendacitis and had me rolling on the floor in fits of giggles to actually learning about our tax system. Who would have thought. Variety is fab!

This was way more informative than the stuff my family and friends have told me about tax 😂 thank you 🙏🏼

Didn't touch on this at uni, let alone the first 16 odd years of school. Nicely done guys!

@11Elevon

3 жыл бұрын

Instead they just teach how many apples did Jill take from Ben, and how many miles did the car go

Im 22, i live in the UK. The term "Tax return" has always confused me. This video actually helped clear it up xD Turns out, unless im self employed or own my own buisness, i'll never have to deal with it.

As a British person trying to get an income to afford a place of my own (even just renting) this was very helpful! I'm both self employed and part of the PAYE thingy so it's nice to have a refresher on all things tax!

12:25 is the reason why it's a better system (not good but better) as it means that you aren't relying on a government that is full of wasteful spending to provide you with the service and instead you can get it at a lower (normally) cost in the private sector. By structuring it in the way he describes it allows you to still pay minimal tax on those things that you as an individual hold dear while having a low level of tax on the remainder on your income instead of having a high level of tax on all of your income so that the government can provide a public option for those things that anyone may hold dear. Basically you pay less taxes and aren't taxed on the things you care about instead of paying high taxes and your tax being spent to provide services that don't interest you and normally at worse quality than what could be provided by a private company.

Lmao I think you spelt Majesty in HMRC a bit wrong ;)

@evan

4 жыл бұрын

oops

@NatalieAbb

4 жыл бұрын

Glad I wasn't the only one who noticed x

This is a video about two people who do not understand the tax system.

@rwentfordable

4 жыл бұрын

What did they get wrong?

@Carl-ib2hl

4 жыл бұрын

Richard Wentford yh

@jessicagates3697

4 жыл бұрын

Marriage allowance bit was wrong. My husband gets to use about £1250 of my tax allowance which is the max amount because I earn nothing. However than only equates to a saving of about £250. Because you are just increasing the amount of income your spouse can use before they get taxed so you don’t just get rebates for thousands. Also you can sign up to the scheme officially and they give you a new tax code with an M after it and then it just gets done automatically.

@bryan7938

3 жыл бұрын

Jessica Gates you are correct. But tthe rest was reasonably on the nose.

@Andreas4696

3 жыл бұрын

Yep. One misleading thing was the whole "you never pay over 40% in the US". They're comparing two completely different systems. The US is a federal republic with semi-autonomous states. You pay a lot in local and state taxes in the US, as well as federal taxes, whereas in the UK almost all the tax you pay goes to HMRC.

actually, I'm in grad school for accounting in the US, and I'm pretty sure the accountant preparer fee is no longer allowed to go towards your taxes anymore after the huge tax change a couple years back. there were A LOT of changes in the tax world after that bill

Like Luke's dad, the over payment check is my favourite part of tax. You can actually claim it back earlier if you are claiming only based on your own income and you know your paperwork well, but I like getting what seems like free money.

is it just me or does Evan looked tanned :)

@evan

4 жыл бұрын

I was in Croatia for a week and got a lotta sun!

@conormurphy4328

4 жыл бұрын

I KNEW you couldn’t have got tanned here

@briwanderz

4 жыл бұрын

you should watch his travel videos... then you'll see why. :)

"You're never gonna own a house!" - But Lifetime ISA!!!!!!!!!!!!! Effectively knock 20% off your downpayment/deposit.

Yayyyyyyyy lukes backkkkk❤

Another great episode. Learnt loads from Luke on how U.K. tax works! Well done both of you!

Just to let you know that there are some jobs where you can claim some work expenses, while still under PAYE. For example, if you are a nurse - then you can claim tax relief on your NMC membership, and you can also claim for subscriptions to professional bodies & trade unions, and laundering of your uniform. (Source NMC website) While I only know about claiming as a nurse, I'm sure there's likely a few other PAYE jobs out there where you can claim tax back due to professional expenses.

@janani1826

4 жыл бұрын

Wild Hufflepuff it’s technically every job

I can’t believe I just watched a whole video at tax’s😂🙌🏻

@conormurphy4328

4 жыл бұрын

The smexy men helped

thank you for this video!that's cool stuff!

The big difference between the PAYE system and tax withholdings in the US is that in the PAYE system, the employer takes the money out to pay for the employee's income taxes and the employee has not much say in the amount withheld, because the amount for the most part totals to the tax the employee would be required to pay. In the US system, it is the employee who tells the employer how much tax to withhold, through filling out the W-4 form. The US system is essentially an honor system, because the employee directs how much is taken out of his/her pay, and then the return is filed at the end of the year. If the employee had too much withheld, then he/she gets a refund. If the employee did not have enough withheld, then they have to pay additional taxes. There are some people who will choose to have the maximum withheld (single with zero withholding allowances), and essentially use the IRS as a forced savings account. They have more than necessary withheld and then they get a large refund when they file their tax return and they can splurge on shopping or a vacation. Others will claim more withholding allowances so they have very little taken out, and then at the end of the year they get hit with a large tax bill.

Next tell about the difference in car taxes and insurance in USA and UK.

I’m an American and the UK system sound so much better.

@heathermcdougall2399

4 жыл бұрын

it's not. The UK guy totally forgot the extra 12% national insurance everybody pays on top of their income tax.

@tegonlegend

4 жыл бұрын

Yes and also the employer also pays an extra 13.8% PAYE taxes as well. Start adding that up and the government is getting minimum 45.8% of the money before it reaches an employees pockets. If you are on a higher tax bracket, it’s close to 70.8% tax. Then there’s pension which is 10% and student loan. So you could be getting about 20% of your pay check only on a higher tax bracket. And you wonder why we have a productivity problem. People in the UK will avoid work to make more money because the system punished them. Also in the US income tax bracket changes in every state.

@nickwake5484

4 жыл бұрын

That's not quite correct for a number of reasons but the reality of the Higher Rate tax brackets is that you'll be doing a Tax return any way (or a P87) and some of the Tax burden is offset. Net income for most Higher rate payers will be around 67% of salary before any Tax rebates. I've never met anyone that wouldn't want more pay because of tax. I'll gladly take 55% of £150k-£500k any day of the week. :D

@kdog4587

4 жыл бұрын

Yeah but NI isn't just tax, it's for the NHS. Small amount to pay really

@rich7447

4 жыл бұрын

The UK tax rates are far worse even before we take deductions. They hit the 40% tax bracket at 50,000 GBP and 50% at 150,000GBP. You don't hit the 37% bracket until $510,000 in the US. If you make the equivalent of $100,000 USD (76,000 GBP) before ANY deductions, you would take home 52,690 GBP/69,200 USD in the UK and 58,803 GBP/77,245 USD. US deductions increase this gap. After we left Canada for the US I worked out the approximate income level that you have to reach before it becomes advantageous to live in the US. At the time, about 10 years ago, it was around $55,000 US. This included the expense of paying for health insurance in the US. Deductions are also a big part of the US tax system. We fall into the 150,000 to 500,000 GBP bracket. With deductions our federal, state and local income tax plus payroll taxes (medicare etc) was 22% and we are in a high tax state (MD), just outside a high tax city (DC). Medical insurance costs us approximately 2.5% of gross income and our max. out of pocket medical costs with our plan are about 2% of gross income. That puts our tax and medical insurance burden at approximately 27%.

Hey Evan edinger and Luke. Great video Evan. I like it when Luke is around. Luke is such a nice person and a great person to have in a video. But great video Evan 😍😍😍😙😙😙

Thank you soooo much for this it was surprisingly interesting, and to boot I told my parents about the marriage tax allowance and they just got the cheque in the post!

The “information” in this video is wrong in so many ways. Listening to these guys talk about taxes is about as helpful as asking your grandparents to help you with your iPhone.

@Ryan-lk4pu

4 жыл бұрын

I'm a paye expert. Not a brag but I have a portfolio of around 30 payrolls, with up to 350 employees on each, a month and I found sections of this so cringe. And when he said paye was a tiny amount I facepalmed lol

@Gates2Aion

4 жыл бұрын

True, there’s a lot they dont talk about with the American tax system. I believe they’re a little bios to say the British tax system works better without giving an equal understanding

@Ira88881

4 жыл бұрын

They’re fucking idiots.

@pollyevans529

3 жыл бұрын

Didn’t mention anything about K codes if you earn over 100k, nothing about allowable expenses as PAYE such as mileage during work hours with your own car, nothing about reduced tax allowances for company car & duel cards, nothing about uniform expenses on laundry, nothing about state pension being taxable & out of your tax code And that’s just PAYE Never-mind when your expenses in PAYE exceed 2500 and then you have to file a tax return too.

@pollyevans529

3 жыл бұрын

... fuel cards not duel cards. I am intrigued of tax on Pokemon cards in the workplace though.. 🤔😂

Evan's glasses + Luke = Ed Sheeran.

I got an ad for "Turbo tax" while watching this, lmfao..

We now must have a video comparing what the taxes are used for now

I love the spelling of HMRC: “Her Magesty...” it’s “... Her Majesty” 😂

Ive been working full and part time for over 5 years and i still havent earned enough money to be taxed... Which is both good and very bad...

Luke should make more videos on similar topics like this

The only fools and horses theme kept playing in my head.

There’s a lot of inaccuracies there. He did not take into consideration the deductions that allow people making roughly 35k a year without paying tax.

Though the standard deduction is $12,000, so you don’t pay us tax below that

@santospantoja5364

4 жыл бұрын

I think it's like $10,000

@advfs

4 жыл бұрын

For 2018, it was $12,000 in 2019, it will be $12,200

But don’t forget... In the US you have an individual standard tax deduction. So if you earn below a certain amount you will be refunded all the tax you paid. If you’re employed, you pay tax as you go and there is no way for the government to know how much you will end up earning for the year. The standard deduction for a single person is $12,200 for 2019. So if you earn this(or less), you will be refunded all the federal income tax that you paid. So, effectively, you end up paying 0% on at least that amount since it reduces the taxable income by that amount(possibly more if you itemize).

American who lived in the UK for three years here. Each year I did my USA taxes through turbotax. There is a section on there that allows you to exclude the income you make in a foreign country based on some "tests" that you can pass. For example the one is the physical residency test which basically means you've lived in another country and pay taxes there so you are exempt. At least that's my understanding and hopefully I've done it correctly! I'm back in America now, but lived in the UK most of this year, however will not be able to exclude the income I believe because I'm back. Luckily the HMRC does issue a refund of tax paid to UK through PAYE if you do leave the UK, however note the tax years are different in the UK april-april vs usa January to December..Long story short I think I'm going to have fun filing my taxes this year! Always enjoy your videos Evan, thanks!

A lot of people in the U.S. that don't have a lot of income actually get back more then they paid in during the year

@charlieclark2609

4 жыл бұрын

I only get back around $300 dollars out of my job . And I make minimum wage , which is $9.25. I dont know what I'm doing wrong but it seems like I should get more than that, since I pay over $100 in taxes on each paycheck

@Tjoe300

4 жыл бұрын

@@charlieclark2609 If you don't have any dependents then you typically wouldn't see a big return

@charlieclark2609

4 жыл бұрын

@@Tjoe300 goddamn that sucks. I don't have any kids and I'm not married.

The tax man's taken all my doe, and left me in my stately home, lazing on a sunny afternoon.

ooh this was so interesting!! loved this!

@stacker63

4 жыл бұрын

really nice spon transition too evan!

@evan

4 жыл бұрын

@@stacker63 Thanks! The aperture was weird but :'D

@stacker63

4 жыл бұрын

@@evan :D

Thank you for this video!

You are 100% wrong about low income paying tax! A: if you make less than $12k or so you aren’t even required to File a return. B: the individual standard deduction today is over $12k per person, so if you make $12k and file taxes as a single person, it would be a wash. C: more than 40% of tax filing Americans have a $0 federal tax burden, and get every cent back that they paid. No question our tax system is shit, but a lot of what you have said is wrong.

Doesn’t Luke look like Ed Shearron

@zoea9073

4 жыл бұрын

If you only look at his hair and eye colour yes 👌🏼

@maebh2462

4 жыл бұрын

Zoe and Asma I agree sometimes

@evan

4 жыл бұрын

r/therewasanattempt

@Codex7777

4 жыл бұрын

Not really. Are you implying that all ginger people look alike to you? I've heard people spout similar nonsense about all black people. I hadn't realised that this nonsense had spread to redheads. If you really believe he looks like Ed Sheeran, you have a problem with either, your eyesight, or with your perception generally...

@collettegeorge5844

4 жыл бұрын

@@Codex7777 I used to get exactly the same "omg you look so much like Emma Stone!" (when she had redhair)..... Its like... No i don't it's just the only ginger celeb you can think of 😂

I LOVE YOUR VIDEOS KEEP GOING

This would be really interesting to see the Australian tax system added in too

I want more irish people 😂😂😂 Luke's a ginger so I guess that's close enough

@maebh2462

4 жыл бұрын

Same

@ceecie5776

4 жыл бұрын

Ireland isn’t in Britain tho

@maebh2462

4 жыл бұрын

true

@maeveyoung9556

4 жыл бұрын

Unless you are talking about northern Ireland

@bronajoyce3955

4 жыл бұрын

@@ceecie5776 I know but then it would be irish vs american

Having some of your money returned is not getting extra money.

@badbatch974

4 жыл бұрын

Yep. It’s literally giving the government an interest free loan.

@davidwillis7991

4 жыл бұрын

I don't think you'll ever convince the majority of people that it's not extra money

Enjoyed seeing you & Luke doing another video together, but I found the content to be very TAXING....... CHEERS

Much needed video!

No income tax, no VAT, no money back, no guarantee...

@helenl1794

4 жыл бұрын

...black or white, rich or poor.....

@lynnhamps7183

4 жыл бұрын

@@helenl1794 ....We'll cut prices at a stroke...Long live Hooky Street...

@Jess140594

4 жыл бұрын

Lynn Hamps vivvvaaaa hooky street

@axyridis9436

4 жыл бұрын

@@Jess140594 c'est manifique

@Jess140594

4 жыл бұрын

axyridis hooky street...

The government doesn’t make you file your taxes so you know how much you made/paid. We file our taxes as a means to audit the Government to make sure they’re not taking more tax money than they’re supposed to. It is 100% FREE to file your taxes in the US. The most convenient methods are not always free, however, you can fill out a physical form (1040EZ) and mail it in & it costs nothing (outside of the cost of the stamp). Also, if you make less than $12000 annually & are under the age of 65, you do NOT have to file federal income tax in the US.

@raymondgoodwin6171

4 жыл бұрын

No the only reason we have to file taxes is because of turbo tax and other companies that made it impossible for the IRS to just file them for us, and send us a sheet going "Is this correct".

@koobs4549

4 жыл бұрын

Raymond Goodwin our tax system was established long before companies like Turbo Tax were in existence so your argument doesn’t really hold up.

One significant difference that Evan did mention is the fact that the US imposes a tax obligation based on citizenship. US citizens who live outside the US are subject to US income taxes even if they don’t live in the US and even if their money is not earned there. So, Evan’s income from the UK is taxable in the UK and in the US. The UK does not tax its citizens who live abroad if they do not have any UK sourced income. Now, Evan does mention that there is an exclusion of about $100,000 that can be earned by an American who lives abroad, but that exclusion only applies to salary, not to investment or other types of income. On top of that, certain UK tax free savings schemes like an ISA are not tax exempt under US law. So, an American living in the UK with an ISA is subject to US income tax on the ISA’s earnings each year, even though those earnings are tax exempt in the UK.

It is interesting that, while in the UK we do not get chaitable donations deducted from our PAYE , the charities can claim the tax we have paid on any donations we give them.

When's the video about your day trip to Walsall 😂😂

@evan

4 жыл бұрын

I wish I knew! I made it for a brand and you'll probably see it online soon enough! I'll defo tweet it :)

@kirstyann3987

4 жыл бұрын

@@evan hopefully they'll let you post it soon ! Even the people who live in Walsall don't like Walsall so it'll be interesting to see what an outsiders opinion is!!

@DJGadj

4 жыл бұрын

Kirsty Ann he went to walsall? i live like 20 mins from there

The reason why they don't teach these things in school is that they want the citizens to not understand the taxation system and other things about the government.

Also in the US we have an Earned Income Tax Credit that is there to give you a credit that brings your earnings up to the poverty line which is ~16k for a single individual

nice to see Luke again. as for always paying (federal) taxes.. well: with my first job my mother prepared my taxes for me, but i thought maybe if i had H&R block do it i'd get more back... well, not only did they charge me $49.95 (i think) but i would actually have gotten less back!! so i had to pay them for the paperwork, but let my mother do it and teach me how before actually filing. (she does other peoples taxes that she works with, charges them "a cup of coffee" but most give her something anyway) for a few years i actually did get back everything i payed to federal taxes, sometimes even extra from "earned income credit" (but still payed social security. medicare etc) then when obamacare kicked off, my tax return dropped and dropped and dropped.. to the point i owed in state taxes and got down to only a $300 refund... meaning i payed in about $1300 just to federal. luckily about 2 years ago.. the latest tax reform drastically changed it back to where i get almost what i payed in. i do my own taxes using turbotax it's very easy IF you work just one or two regular jobs for a company, takes me like half an hour, but it can be even easier with the new phone app, it actually takes a picture of your W2 forms and fills it all in, then asks you questions about other possible deductibles. self employed i know is a LOT more complicated... i tried to itemize once, claiming my mileage driven to work, etc, etc.. took me an extra hour and made no difference at all.. so i just stick with the standard deductible now.

Wish a Canadian was in this! It would be very interesting

@mohammedyakub3760

4 жыл бұрын

Suggest it. He does stuff like this with scottish, English, Irish, Welsh, and Canadian

@marieasmr6498

4 жыл бұрын

It'd be interesting with an Australian as well

In the US, you get can either take a $12,200 standard tax deduction OR you can choose to itemize deductions. You make the decision at the time of filing. Things like medical costs, some interest paid on loans, donations to charities, even certain commuting to work costs can be deducted. Buying alternate energy sources like solar panels or solar heating systems gives you 35% of the purchase price as a tax credit. I have a $34,000 solar power system on my house and have over $10,000 in tax credits so in years that I have to pay (my accountant actually gets me a sizable refund or a $0 return), so if I had to pay, I could use that credit to pay part or all of my tax.

I love that I learned stuff from this video lol

7:40 this is misleading. There are mechanisms to allow an effective 0% rate until a given income level. The start of the tax bracket is not the start of your income.

@evanjohnson4559

4 жыл бұрын

To follow up: no single person will pay taxes on the first 12,200 worth of income. This is doubled for married filers. I will say, the caveat is that similar to PAYE, there will be an amount withheld but this will be returned completely 100% for the for the first 12,200 of earnings.

@hasmin2252

4 жыл бұрын

@@evanjohnson4559 £12,200? Where??

@evanjohnson4559

4 жыл бұрын

Sorry, to clarify this is $12,200 with the American tax system. We have a standard deduction system that omits all taxes on the first $12,200 of earnings. The caveat is that ahead of the year ending when you don’t know how much total earnings you’ll have, the rule of thumb is there is still taxes withheld each check but it is all returned to you. So it’s just a misleading way to present it