Income Tax! | British VS American

How exactly does the income tax system work in the UK vs in the US? Luke and I find out!
Special thanks to today's video sponsor Lickd! bit.ly/EvanE-Li...
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Thank you so much for watching! Hope you enjoyed it! This is the first video I've shot with my new prime lens. What do you think? I've never had a video on my channel with such a beautiful bokeh before! For future collabs, I'll definitely be decreasing the aperture though. The camera seemed to prefer Luke's face, even with mine saved in the system!
If you're new to my channel and videos, hi! I'm Evan Edinger, and I make weekly "comedy" videos every Sunday evening. As an American living in London I love noticing the funny differences between the cultures and one of my most popular video series is my British VS American one. I'm also known for making terrible puns so sorry in advance. Hope to see you around, and I'll see you next Sunday! :)
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#BritishVsAmerican

[@br1t0n]

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]

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]

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]

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

[@XtremeCookiez]

@@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]

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.

[@Z4mbrer0]

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

[@shannonf101]

Sameee

[@stefox5444]

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]

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

[@stefox5444]

@@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]

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

[@daniellej5470]

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

[@hlund73]

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]

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

[@MIKECHENDERSON1]

@@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]

Didn’t youse have PD? (Personal Development)

[@daniellej5470]

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

[@Chayat0freak]

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]

👏👏

[@Chayat0freak]

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]

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

[@alexwright4930]

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

[@seekar9962]

@@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.

[@anca6702]

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]

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]

That's the next video!

[@ButterflySimmer]

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

[@anca6702]

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

[@Carina5707]

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.

[@johnpotts8308]

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]

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]

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...

[@koue89]

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]

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

[@iofbeholder]

Exactly. Ty.

[@hells-bells900]

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]

Devin Caranza but those aren’t income tax.

[@brmolnar]

@@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.

[@emmahigham2699]

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

[@tensemurm5924]

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]

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

[@emmahigham2699]

@@tensemurm5924 That's a valid point

[@visitingstatue171]

@@TheGomezdotcom 😂 i was gonna say the same thing

[@funkypigeondotcom7917]

Moonlit Waters me too 😂

[@NoFormalTraining]

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]

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]

@@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.

[@papaquonis]

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]

@Chris Behne really?

[@kenneyp1]

Keep in the heard sheep.

[@timsgilable]

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

[@farmkidspm]

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]

@@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.

[@thatsaltybrit2603]

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

[@joannakennedy6005]

Me either!

[@ChaosTherum]

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]

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]

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]

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

[@captainkrunch]

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.

[@jplegend98]

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

[@Chilukar]

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]

@@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]

@@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]

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]

@@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.

[@HopeWilson1]

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

[@mrdefaultynoob]

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

[@HopeWilson1]

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

[@thomassmall70]

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

[@user-qb3tk8rs8t]

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

[@tomstech4390]

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

[@julietmosby4235]

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

[@badbatch974]

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

[@MrRedberd]

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

[@MrRedberd]

@@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]

@@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]

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

[@celestialdolphin9029]

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

[@empty912]

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

[@maybachlover15]

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.

[@Cookoo49]

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

[@meggiebeth3202]

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]

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]

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.

[@glennsmith6380]

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]

The us still gets taxed for healthcare

[@Robert-cu9bm]

romaneeconti02 By choice, not to survive.

[@rtsharlotte]

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

[@grahamsmith9541]

@@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]

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.

[@KatyAdelson]

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]

It's waaaaay worse here in Germany.

[@kpresleyut1]

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

[@briwanderz]

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]

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

[@job996]

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]

.. 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 🤣

[@mojanora]

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]

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.

[@markrturner84]

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]

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

[@fortheloveofjess657]

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]

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

[@psyskeptic9979]

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

[@mdot9551]

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

[@LeahAutumn]

is it just me or does Evan looked tanned :)

[@evan]

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

[@conormurphy4328]

I KNEW you couldn’t have got tanned here

[@briwanderz]

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

[@vballchamp98]

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]

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

[@thomas9152]

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]

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

[@salvor5764]

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

[@hlund73]

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

[@Codex7777]

...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]

@@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]

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

[@Jane-yg3vz]

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

[@rwhunt99]

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

[@rwentfordable]

What did they get wrong?

[@Carl-ib2hl]

Richard Wentford yh

[@jessicagates3697]

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]

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

[@Andreas4696]

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.

[@GazilionPT]

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]

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]

@@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.

[@noahg7442]

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

[@evan]

oops

[@NatalieAbb]

Glad I wasn't the only one who noticed x

[@DiogoExMarques]

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]

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

[@xNYCMarc]

@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.

[@OneSidedEquilibria]

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.

[@Britonbear]

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.

[@MrSwanley]

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]

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

[@innocentbystander3002]

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).

[@badbatch974]

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]

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]

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]

They’re fucking idiots.

[@pollyevans529]

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]

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

[@ozzitor8]

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

[@heathermcdougall2399]

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

[@tegonlegend]

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]

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]

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

[@rich7447]

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%.

[@millie000k]

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

[@Vennnaya]

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.

[@Seansousa757]

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.

[@CautiousDavid]

Neglecting to mention the Standard Deduction when discussing how much you can earn tax free is a massive oversight. US standard deduction for a single individual is $12,000 in 2019. This means your first $12,000 of income is Federal Income Tax free in the US, because regardless of any other deductions you may or may not qualify for you are guaranteed at least $12,000 as your standardized deduction. Good video overall though, that one just irked me.

[@bronajoyce3955]

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

[@maebh2462]

Same

[@ceecie5776]

Ireland isn’t in Britain tho

[@maebh2462]

true

[@maeveyoung9556]

Unless you are talking about northern Ireland

[@bronajoyce3955]

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

[@johnseah957]

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.

[@alexwright4930]

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

[@abrahemsamander3967]

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]

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]

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.

[@gsoffice6402]

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.

[@vivianvisi0n]

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.

[@kimberleywinward6642]

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

[@evan]

oooo

[@terilyte3152]

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

[@isoroxuk]

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]

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

[@isoroxuk]

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.

[@JivanPal]

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

[@peterscott9137]

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

[@yurihuffles]

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]

Wild Hufflepuff it’s technically every job

[@hkjuhucampbell4005]

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

[@a.j.conway1442]

I gotta say..... He lost me when he said he liked paying taxes because he was contributing to society...... UH Idk if this is the American in me but I think you should legally avoid every penny of tax possible. Governments are irresponsible enough.

[@stiras1]

Evan's glasses + Luke = Ed Sheeran.

[@Jess140594]

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

[@helenl1794]

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

[@lynnhamps7183]

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

[@Jess140594]

Lynn Hamps vivvvaaaa hooky street

[@axyridis9436]

@@Jess140594 c'est manifique

[@Jess140594]

axyridis hooky street...

[@ScorchTheRedhead]

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!

[@klausjackklaus]

So for starters, my dad does my taxes with turbotax since he owns his own business and is knowledgeable about it. Second, in Ohio income tax is progressive and anything under $22,150 is considered "non-taxable" and therefor its 0% on the first $22,150. This is similar to the federal system which current as of 2020 is $18,250 I believe. But when your employer takes out the money, they assume the state/federal governments will charge the maximum % so thats why you get a big check back because technically you over paid. This year I made $22,000 so my "effective tax rate" for state is 0%, for federal 4.36%, and for local 2.25%. FICA is what you pay for medicare/medicaid & social security; it is 13.5% but is split evenly between employer/employee so 7.65% is taken out of your paycheck.

[@gracious7153]

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

[@conormurphy4328]

The smexy men helped

[@violetmoon1587]

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

[@11Elevon]

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

[@amliv77]

In the UK, we pay 20% income tax, 40% on income over £50,000, 12% national insurance tax on income, 20% Value added tax on most things we buy, we pay roughly 60 pence in tax on every litre of fuel we buy, if you smoke, you pay roughly £7 in tax on every packet, road tax on any vehicle you own, if you drink, you pay about £8 in tax on every bottle of spirit, around 45 pence on a pint of beer. In all in the UK there are well over 100 different taxes on many things. For example 20% tax on toasted sandwiches. We have to pay a monthly tax on the value of the house you own which is between £100 & £300 a month. But yes our healthcare is "free"

[@Aima952]

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.

[@koobs4549]

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]

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]

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

[@asmasaeed7809]

Doesn’t Luke look like Ed Shearron

[@zoea9073]

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

[@maebh2462]

Zoe and Asma I agree sometimes

[@evan]

r/therewasanattempt

[@Codex7777]

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]

@@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 😂

[@scragar]

HMRC is always nicer to work with because their budget isn't determined by how much tax they bring in. The HMRC isn't affected by needing to issue refunds or delaying payments etc so there's this whole thing where as long as you're honest with them they're likely to just work with you to resolve things. When I was a kid and got my first job I'd mistyped my NI number on the form, so the taxes were wrong and it was messing with someone else's taxes too. HMRC were really understanding and helped resolve the issue for everyone involved and even gave me a rebate since they'd charged too much. My screw up caused them trouble, but they still sorted it out as if it was their job to fix my mistake. And at my last place of work someone switched jobs in early April, so when they gave in their P60 it was accidentally filed for the wrong tax year. Resulted in them getting messed up income tax and wages, yet again however HMRC basically helped resolve everything and worked out how to fix everything. Everyone hates paying taxes, but I'd rather deal with the weirdly helpful HMRC than the american alternative. ALSO you can claim deductions and similar if PAYE, there's a form for it you can just fill in online where you say what the deduction is for from a list, attach proof(receipt/bill), then confirm you used said thing only for work(since you only get deductions for work expenses, if you use it personally they treat that as a personal purchase used for work, not a work related purchase meaning no deductions). There's a bunch of little things in it though like you can't claim travel expenses to your regular workplace and there's no proof needed for certain expenses below a particular value(like working from home electricity costs, stationary, or uniforms) while others always need proof(tech, safety equipment, etc), luckily the form walks you through everything automatically.

[@Queencrazy1997]

I'm dating an irs agent. I was going to mention how the tax filing companies are responsible for the irs not even being allowed to help you with your taxes until you said it. Also, the irs of today is not the same irs of 40 years ago, they dont really put you in jail unless you pull some major fraud. Also, there IS a point where you dont pay taxes. I don't make enough to have to file but still do because I still get some back sometimes

[@noahremnek3615]

I unsubbed to this channel. He forgets there is a standard deduction and says the poor pays taxes. Insane.

[@rvanzo925]

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.

[@whistlingbanshee5038]

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...

[@NETWizzJbirk]

US Homeowner Here... You only get to claim a mortgage deduction on interest if you itemize instead of take the standard deduction. This realistically means for most that you need over $12,200 in deductions to make the itemized deduction better than the standard. Then let’s say you have $12,500 in interest... this is only a $300 difference meaning you pay tax on $300 less of your income. To do this you need to file schedule A. Now let’s say this decreases your State tax liability by $100 so you get a $500 refunded instead of $490 refund. Next year the state sends you a 1099-G reporting your State tax refund as taxible, so you pay tax on a refund from overpayment of tax.

[@paigeconnelly4244]

Okay, while we do have a bigger tax bracket in total (not for lower earners though), we do also have free healthcare. So while you pay less tax in the US as higher earners, you pay A LOT more in health insurance/out of pocket expenses for medical bills. As well as this, student loans here are borrowed directly from the government and you don't have to pay them back until you earn around £26,000, and the repayments are REALLY low, it's like 2% of your wage. So if you earn £30,000 a year, you pay £600 a years as a minimum. Also, because it's from the government, HMRC takes it directly out of your paycheck so you don't have to remember to pay it, or get chased for it.

[@kishens1]

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

[@ferky123]

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.

[@SCGMLB]

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.

[@borikkiv]

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.

[@advfs]

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

[@santospantoja5364]

I think it's like $10,000

[@advfs]

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

[@keensweep]

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

[@badbatch974]

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

[@davidwillis7991]

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

[@peterbrown1012]

Even on PAYE you can get deductables, example, if you wear a uniform that you have to clean yourself you can get an allowance for that.

[@jamiea9634]

If you are in the lower end of the income $10,000 or less you will get all your federal taxes back, especially if you have a family. I had years when I was going to school and working part time where I got 100% of what I had paid into the fed tax. Most people don't profit from itemizing and using deductibles, especially if you work a regular job and are not self employed. We have a similar system to the PYRE unless you tell them not to on the tax form you will out when you start a job they will take out the maximum, you will most likely get it back. Kind of like Luke's Dad getting back money because his mom paid a full share, and as a married couple they are expected to pay less then 2 single people.

[@jamesg8246]

Why didn't he talk about the large percentage of Americans who make low wages and not only don't end up paying taxes, they get thousands more in a "refund" than they ever paid in .. Hhmmm?

[@SalemK]

Heres how it works: I make less than $12,000 a year. I barely pay taxes through my employment as a single person with no dependents. However, you hear in the video Evan talks about claiming certain things on your taxes- if you claim you have paid a certain amount (given that it's something the government allows to be claimed for) you can actually cause that 10% (for me) to become a negative meaning the government pays you back for taxes you "overpaid" for. So if a family who has six kids with unmarried parents has one working member making less than $12,000, they can work the system. The working family member maybe pays 12% in tax out of his check during the year. So they say okay, he's in the 10% tax bracket. He has paid slightly more than his owed 10% so well give him the rest back, lets say 200. But wait, he has 6 children. So we must deduct $2,000 per each child out of that amount. So we now "owe" him $12,200. He has officially gotten back more than he has not only paid in, but earned in the year. And children are not the only thing. There are several other things you can claim for.

[@SalemK]

By the way, if one is single under 65 and makes less than $12,000 a year, they are not required to file. However, in this case, it is actually beneficial for them (however corrupt it may seem) Also forgot to mention: since this person made less than the federal $12,000 required, he will actually receive the tax he paid back. So not only will he receive the $12,200 (or whatever it may be) but will also receive the 10% he paid in over the year

[@arunsalwan8558]

Sarah Jane what about the earned income credit where lower income people actually get credit for working ..they can get thousands back ..

[@Tjoe300]

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]

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]

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

[@charlieclark2609]

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

[@MRSketch09]

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

[@maxmillion7007]

one thing might not be clear... in UK P.A.Y.E. is ALL your income taxes part of which is used to give you free medical, dental and basic pension. in The US those tax rates were FEDERAL income tax... you then have to pay STATE income tax.(anywhere from 0% to 8% depending on state) which pretty much can bring the top tax bracket to equal levels..... but then you have to buy medical insurance, dental insurance, pay your share into pension plan, don't get 4 weeks paid leave, pretty much have to hire an accountant and a few other things I am probably forgetting that all add up to realistically you are paying more "Taxes" in the USA.

[@johnlabus7359]

There are deductions and exemptions that reduce your income in the USA, which effectively give you a certain amount of tax free income. You aren't taxed on every dollar you make.

[@evanjohnson4559]

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]

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]

@@evanjohnson4559 £12,200? Where??

[@evanjohnson4559]

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

[@whattheydidnttellyouwithbr2844]

1) There is a Standard Deduction in the US that you don't have to pay taxes below, which is $12,400. 2) The US during the 60s and 70s also had tax brackets of 85%

[@addicted2caffeine]

Also 5 mins in. Paye in the UK can offset expenses, you have to fill out a form and attach a copy of the receipt. Anything work related. Ie I work in a supermarket, I get an increased personal allowance for washing uniform... I also send off expenses for work shoes, trousers, etc..., since last year self employed people can no longer file for travel money to work as its now considered just travel to work like a Paye employee. And that gift of 30k bonus tax free ( dividence, yeah it's gone) tbf I think Paye is the best way to go these days.

[@mrsreefc]

US tax laws changed in the last two years that makes it so the standard deduction is so high that the majority of people don't file itemized deductions anymore (because it would increase your taxable income), and without itemizing you can't deduct your mortgage interest.

[@mrsreefc]

@karen may for the last 5 years we itemized because it was better. This year was the first year it wasn't beneficial because of the new deduction amount. Under the old deduction amount it would still have been beneficial for us.

[@NEVERwillIletUgo]

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

[@caitrionaoconnell3851]

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

[@kirstyann3987]

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

[@evan]

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]

@@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]

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

[@cloemaclean806]

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

[@mohammedyakub3760]

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

[@marieasmr6498]

It'd be interesting with an Australian as well

[@michaelstevens3479]

A Rolls Royce is tax deductable just sitting outside an office,but on PAYE you can spend any amount getting to the same office and you get no allowance at all.

[@TheOnlyLivinBoyInNY]

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!

[@ianprince1698]

if you donate to a charity in the UK, the charity itself collects your tax refund at 20%

[@taylormcgrath]

Uk- I’ve been taught about tax in maths

[@RoBRoB1231]

As An accountant in the UK the US system seems quite complex when compared to the UK. The mortgage interest comment is incorrect though. If renting a second home (buy to let) you can deduct the interest from the mortgage but HMRC are completely phasing this over the next few years :( The marriage allowance comment is also incorrect and his dad should not be getting a tax refund because they are married. You can transfer part of your spouses tax code to your own. He might get a refund in the first year but you can then call HMRC get your code adjusted for future years to avoid that happening in future.

[@itsjoseyrae]

Rob w I was thinking this, why don’t they get their tax codes changed so that it works out they pay the right amount? Edit: Spelling

[@RoBRoB1231]

@@itsjoseyrae thinking about it, maybe his partner has variable income so wait until after the tax year ?

[@danielwhyatt3278]

I am a 24-year-old uni student in the UK. I literally had no idea about any of the stuff until I watch this video. Really disappointed that I wasn’t taught any of the stuff at college. Just a bunch of pointless maths stuff in my GCSEs. They need to be teaching us proper practical mathematics. Not a load of non-real-world nonsense.

[@hgbarmann]

I’m good this year....Dianne Abbott is doing my tax return...