The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: ibleedirish on September 18, 2014, 05:57:31 PM
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Ok all you tax experts out there! I'm no accountant, but I feel like we should be seeing more in our take home pay. I also don't remember what we currently claim, as we've been at our jobs for a while (and, I have to admit, I just started paying attention. To everything financial. Thanks MMM!). We had our first child this January, and I'm wondering if we should be changing our withholding, so I can optimize our investing.
Married, filing jointly, one child.
My Gross: 137K
Her Gross: 45-50K
What should we each claim? One? Two? Ten? I'd love to break even tax-wise in April, as I prefer not to give Uncle Sam an interest free loan each year. Our income has fluctuated up/down a little the last few years as dinks, so we've varied from owing 8k (ouch!) to getting a $400 refund.
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Hard to say for sure. 2 or 3 exemptions on your w-4 is likely best. Max both 401k's for sure. The kid will help a bit but you make too much for the child tax credit.
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We should totally try to make less. I'm going suggest we work half-time and help half the people, with our professions.
In all seriousness, thank you for your help. Sometimes I get irrationally bitter...
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See http://forum.mrmoneymustache.com/index.php?topic=23628.msg397577#msg397577 for some thoughts on this subject.
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We should totally try to make less. I'm going suggest we work half-time and help half the people, with our professions.
In all seriousness, thank you for your help. Sometimes I get irrationally bitter...
Don't make less, defer more. I saw your other thread where you said you max both 401k's so that's great. Is any of that income self employed income? If so, get a sep ira. Keep any deductible debts. If you are paying for childcare you can get up to a $600 credit per child. HSA? Do everything you can to lower your agi to get closer to that $1k child tax credit.
I'm in the same boat as you. Good problem to have though. We defer about $35k of income via 401ks as well. Getting any part of the credits you are phased out of at that income level will reduce your taxes at a rate of 40%ish.
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Are you paying for childcare? We will next year and I'm setting up a DCFSA. Contribute to it before tax and can use it to pay for daycare (as in keep receipts and pay myself back in december). Up to $5K/year for couple.
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Good point on the childcare, I will have some expenses next year, and will be using my FSA to cover those.
Thanks all for the replies. Super helpful.