Question

Can anyone explain to me how federal taxes are allocated differently between American and England?

Answer 1

Basic Difference between American and England Tax

As a US citizen or green card holder, you are liable to tax on your worldwide income, even if you are not living in the US but In the UK who are living outside are only liable to pay UK tax on income which is earned in the UK. You can stay in the UK for as little as a month and be tax resident if you have a house there and work in a local office.

• Most employees in the UK don’t have to file a tax return. The company where they work collects their tax and pays the government directly. Where in the US, the tax office tells your company your tax code, so you don’t have to file a return.
• There are no tax allowances in the UK for dependents, such as children or parents in old age, where in the US for each child you have reduces your taxable income by about $4,000.

          In the USA federal income tax is 35%, when they earn more than $398,100 in a year wherein the Uk tax is 40% if you earn more than £42,475 and 50% if you earn more than £150,000. So you pay less income tax in the US.