My husband works full time as a W2 employee (engineer) grossing $140k. He maxes his 401k. We have 2 kids ages 2 and 4. A few months after #2 was born, his company asked me to come on as an independent contractor (engineering) working 2 days per week and I jumped at the chance. It wasn't about money, I needed adult interaction in my life. About a year in, it went to 3 days per week. This year we added a second rental property to our existing rental property for a total of 2, which I do all the managing and yard maintenance for.
Needless to say, I'm feeling very busy and kind of stressed, even only working part time. My actual job is very easy and enjoyable but it's the stress of getting the kids up and ready and to daycare on time and the rush after to get dinner cooked on work nights and the lack of free time to do everything else that's stressful... Cleaning, cooking, yard and house maintenance, grocery shopping, kid activities, socializing, rental property management, etc. On top of that, I just really looked into how much I'm netting after taxes and daycare this year and it's starting to not feel worth it at all.
Here's the break down (approximate):
My 2015 Gross: $60000
15.4% Self Employment: $9240
i401k: $10000
2015 Fed/State Taxable: $50000
25% Marginal Federal Rate: $12500
9% Marginal State Rate: $4500
Daycare 3 days/week: $10296
Net after taxes/daycare + i401k: $23464
I know this isn't exact but it's close enough approximation for me because there are other deductions and credits that we'd qualify for without my income. I ran more exact numbers in the case study spreadsheet and with me not working, our tax bill (total) would be approximately $28k this year, with me working it will be approximately $58k. That's insane to me that adding less than half of my husband's gross income increases the taxes we pay by more than double!
So, currently, my plan is to go back to the original 2 day work week schedule to alleviate some stress immediately and continue until May, which will also allow me to finish up much of my current project. My husband's 401k plan is maxed out but this past March, due to means testing, he got a $10k refund (which we invested into the 2nd rental house). This spring, we expect a similar refund, which we would put into my i401k against 2015 (bringing it up to a $20k contribution for the year). That's also part of the reasoning of me working until May next year so that we can make sure we have enough space to do a similar thing with any refunds he may get in the spring of 2017, applying to 2016 taxes.
This has the added benefit of spending a few months with my daughter before she starts Kindergarten and being able to be really involved in her school after she starts. We have a high NW (7 figures) and about a 50% savings rate so we really don't need my income at all. In fact, all of it goes into savings and extra debt pay down (only debt we have are mortgages on our 3 properties).
It seems obvious which way I'm leaning and should go but maybe there's something I missed in the numbers or that you all might think of that wouldn't make it so obvious?
Anyone else go/going through a similar dilemma?