This is a tool that calculates the income tax and net income for the earned income, for a single person or married couple, over a specified tax year, in the United States (US) centres of New York and Chicago, and displays the results in a table for each centre. Optionally, it is possible to include social insurance contributions in the analysis. In which case, each results table also displays the calculated social insurance contributions, with the net income reflecting this extra deduction. In the case of a married couple, the displayed results show the total gross income, income tax and net income, though the tax may be calculated via separate or joint assessment.

Additionally, if required, the tool displays more detailed results from the tax calculation:

• A detailed results table is shown for the annual tax calculation for each US centre, displaying the calculated tax at federal, state and city levels, together with the total. There is a row for each relevant income: your own, your spouse's (if married and separate assessment has been chosen) or your joint income (if married and joint assessment has been elected for).
• The federal income tax is calculated using both the regular method and the alternative minimum tax method, with the maximum tax being selected.
• Therefore, in the detailed results section of the tool, a results table is shown for the annual regular federal tax rate calculation, with a row for each relevant income: your own, your spouse's (if married and separate assessment has been chosen) or your joint income (if married and joint assessment has been elected for). Each row shows the standard deduction and personal exemption used, any specified extra deductions, the taxable income, and the calculated tax.
• A results table is also shown for the annual alternative minimum federal tax rate calculation, with a row for each relevant income: your own, your spouse's (if married and separate assessment has been chosen) or your joint income (if married and joint assessment has been elected for). Each row shows the personal exemption used, any specified extra deductions, the taxable income, and the calculated tax.
• To show how the actual tax is determined from these calculations, an extra table is displayed to indicate which of the regular or alternative tax calculations results in more tax and is thus chosen.
• There are also detailed state and city level tax tables for each US centre, with a row for each relevant income: your own, your spouse's (if married and separate assessment has been chosen) or your joint income (if married and joint assessment has been elected for). Each row shows the standard deduction and personal exemption used, any specified extra deductions, the taxable income, the tax percentage in the case of a flat tax, and the calculated tax.
• If social insurance contributions should be included in the comparison, a further federal level social insurance contributions results table is shown, with a row for each relevant income: your own, your spouse's (if married) and the total (if married). Each row shows the social security contributions, the health insurance (Medicare) contributions, and the total contributions.
• Finally, a results table is given for each progressive tax rate calculation, at federal, state or city level, showing the tax band details (the range, taxable income, tax percentage rate and calculated tax for each band).

For the income tax calculations, it is necessary to supply the following compulsory information:

• Your gross earned income in monthly, weekly or annual terms.
• The tax year, noting that this runs from January to December in the same calendar year.
• Your date of birth, in the default format (DD/MM/YYYY), unless you change the format in the menu. To reduce the time needed for data entry, a default date of birth is provided. Only if you are 65 or over during the tax year, and age related allowances come into consideration, is it essential to provide an accurate birth date.
• Your personal status, i.e. whether you are single or married.
• The number of dependent children. If this is greater than 0 and your personal status is single, the tool assumes that you are a single parent who provides sufficient support to the children to qualify for single parent tax tables, allowances etc.
• Whether social insurance contributions should be included in the comparison or not.

If you are married, it is necessary to supply the following additional information:

• The gross earned income of your spouse in monthly, weekly or annual terms. If this field is left blank, the tool assumes that your spouse has no income.
• The date of birth of your spouse, in the default format (DD/MM/YYYY), unless you change the format in the menu. To reduce the time needed for data entry, a default date of birth is provided that can be used by most tax payers for calculating tax. Only if your spouse is 65 or over during the tax year, and age related allowances come into consideration, is it essential to provide an accurate birth date.
• Whether you should be assessed separately or jointly.

The tool automatically includes certain tax deductions when determining the taxable income and thus calculating the income tax: by default, standard rather than itemised deductions are applied, and the appropriate personal exemptions (depending on personal status and the number of children) are deducted. If there are any extra income tax deductions that should be taken into account, and/or itemised rather than standard deductions should be applied, open up the extra deductions section. For each tax calculation for yourself, and your spouse (if married), enter the relevant extra deduction amount. This includes pre-tax contributions to a retirement plan, permitted moving expenses (which are one of the specific allowed deductions) etc. If standard deductions are switched off, this should also include the itemised deductions. In more detail, the following information can be entered:

• Any extra annual deduction for the regular federal tax calculation, for you and your spouse (if married).
• Any extra annual deduction for the alternative minimum federal tax calculation, for you and your spouse (if married).
• Any extra annual deduction for the New York state tax calculation, for you and your spouse (if married).
• Any extra annual deduction for the New York city tax calculation, for you and your spouse (if married).
• Any extra annual deduction for the Chicago (Illinois) state tax calculation, for you and your spouse (if married).

Various general points to note concerning the US tax calculations are:

• A married couple in the US can choose either separate or joint assessment.
• Income is taxed at federal, state and city levels, though not all states and cities tax income.
• In the US, the term adjusted gross income is gross income after pre-tax contributions and specific allowed deductions have been deducted but before standard/itemised deductions and personal exemptions have been subtracted.
• Qualification for the blind person's standard deduction cannot be specified in this tool.
• Applicable tax credits are not covered here.
• It is not possible to specify the Head of Household filing status.

The data used by this tool for the US regular federal tax calculation was obtained primarily from the following sources:

• Link to 2009 tax rates and bands: http://www.irs.gov/pub/irs-prior/i1040tt--2009.pdf (Tax rate schedules)
• Link to 2010 tax rates and bands: http://www.irs.gov/pub/irs-pdf/i1040tt.pdf (Tax rate schedules)
• Link to 2011 tax rates and bands: http://www.irs.gov/publications/p505/ch02.html#en_US_2011_publink1000234349
• Link to 2009 standard deduction info: http://www.irs.gov/pub/irs-prior/i1040--2009.pdf
• Link to 2009 personal exemption info: http://www.irs.gov/pub/irs-prior/i1040--2009.pdf
• Link to 2010 standard deduction info: http://www.irs.gov/publications/p501/ar02.html#en_US_2010_publink1000221051
• Link to 2010 personal exemption info: http://www.irs.gov/publications/p501/ar02.html#en_US_2010_publink1000220844
• Link to 2011 standard deduction info: http://www.irs.gov/publications/p505/ch02.html#en_US_2011_publink1000138950
• Link to 2011 personal exemption info: http://www.irs.gov/publications/p505/ch02.html#en_US_2011_publink1000248729

The data used by this tool for the US alternative federal tax calculation was obtained primarily from the following sources:

• Link to 2009 info: http://www.irs.gov/pub/irs-prior/i6251--2009.pdf
• Link to 2010 info: http://www.irs.gov/pub/irs-pdf/i6251.pdf
• Link to 2011 info: http://taxes.about.com/od/1040/a/minimum_tax.htm
• Link to general info: http://en.wikipedia.org/wiki/Alternative_Minimum_Tax

The data used by this tool for the US federal social insurance contributions calculation was obtained primarily from the following sources:

• Link to contribution tax rates: http://www.socialsecurity.gov/OACT/ProgData/taxRates.html
• Link to contribution income limits: http://www.socialsecurity.gov/OACT/COLA/cbb.html#Series

Various points to note concerning the New York state and city tax calculations are:

• The state tax is calculated using progressive tax rate bands.
• The city tax is calculated using progressive tax rate bands, assuming residence in New York City.

The data used by this tool for the New York tax calculations was obtained primarily from the following sources:

• Link to 2009 state tax rates and bands: http://www.taxfoundation.org/files/state_individualincome_rates-20100327.pdf
• Link to 2010 state tax rates and bands: http://www.tax.ny.gov/pdf/2010/inc/nys_tax_rate_150_201.pdf
• Link to 2011 state tax rates and bands: http://www.taxfoundation.org/files/state_individualincome_rates-2000-2011-20110503.pdf
• Link to 2009 city tax rates and bands: http://www.nyc.gov/html/dof/html/pdf/interest_rates/pitrates.pdf
• Link to 2010 and 2011 city tax rates and bands: http://www.tax.ny.gov/pdf/2010/inc/nyc_tax_rate_150_201.pdf

Various points to note concerning the Chicago (Illinois) state and city tax calculations are:

• The state tax is calculated using a flat rate of 3%.
• There is no city level income tax.

The data used by this tool for the Chicago tax calculations was obtained primarily from the following sources:

• Link to state tax rate: http://www.revenue.state.il.us/Individuals/ratespenaltiesinterest.htm
• Link to state tax info: http://www.revenue.state.il.us/businesses/taxinformation/income/individual.htm

Associated tool link: http://www.coggit.com/tools/us_income_tax_earned.html