Warning Numbers Ahead if you already have a headache come back later.
Well it's that time of year taxes. I'm going self employed on March 1 working out of my house. I started to realize that ment accounting. Ok I'm a coder not an accountant so I'm REALLY not looking forward to this. However If I'm going to have time to do what we came here to do. I've got to work for myself so I have the flexibility to do it. Hey shameless plug here want a website or an application Hire me. OK so back to our regularly scheduled program. As I started to look at it and I decide the first place to analyze was taxes you know I grew up doing my taxes since I was 16 I should be able to do it in India right? As I looked at it I started to wonder which is better India or America. The tax Schedule here looks something like this.
Men:
Income less then 110000 is not taxed
Income from 110000 to 150000 is taxed at 10%
Women:
Income less then 145,000 is not taxed
Income from 145,000 to 150000 is taxed at 10%
Both:
Income from 150000 to 250000 is taxed at 20%
Income above 250000 is taxed at 30%
Yep different taxes for men and women. I feel descrimanated against.
Ok so how does it compare to US Rates? Well cost of living works in here somewhere but for simplicity I'll just look at how it effects me in a direct comparison.
I make about $1,500 a month. or 6,00,000 annually. this puts me well over the 2,50,000 cap and into the 30% range.
To Pay 30% in the US you have to make more then $160,000 as a single or $195,000 filing a joint. However only a very small percent of the population makes that much money.
On the otherhand almost any professional in India will eventually exceed the 2,50,500 limit. In India and pay 30%.
However looking at it by overall percent of the 1,000,000 indians that make more the 2,50,000 I would guess it is less then the percentage of Americans making over 160,000.
But after I work my way through the Inidan Tax Scedule it looks like I end up paying about 21% total tax.
If I was in the US making the same wage I'd pay 15%. So initially it would appear I'd be better off with the US Schedule.
But then in the end there is one item I'm leaving out entirely. Social Security TAX. at 7.65% for an employee and 15.3% for self employed I'd be paying 22% tax as an employee in America on my $18,000 or 30+% as self employed. Sorry looks like in the end my take home in India on $18,000 will be more then it would in america by almost 9%.
So it looks like it's not so bad after all though losing $3,200 of my $18,000 doesn't look like a happy prospect. Fortunately this year all I have to worry about is me. Stay tuned for next year when I analyze what it's like to pay Personal Income tax, Corporate income tax, and non-Profit income tax all in the same tax year.