W-4 Line G...Child Tax Credit

[aceyou]

Hello MMM'ers,

My wife just got a new job, we don't know what number to put for line G, Child Tax Credit.  Here's our info:

We have two children, aged 4 and 1
My salary: 71,000
Her salary: 75,000
cash in lieu of insurance: 6,000
Total: 152,000

It says "if your total income will be less than 70,000 (100,000) if married), enter 2 for each eligible child; then less 1 if you have two to four eligible chidren or less 2 if you have 5 or more eligible children.  If your total income will be between 70,000 and 84,000(100,000 and 119000 if married ) enter 1 for each eligible child". 

Additional information: we are planning to stash 36,000 into 403B plans, and may put an additional 18k into a 457 plan, if this changes anything. 

So...what number are we supposed to put in line G?  Thanks!!

[seattlecyclone]

Sounds like your total income will put you above the range where you would qualify for this credit, so you would put 0. You might both want to put "married but withhold at single rate" on the form since you're both working and earning roughly equivalent salaries. The "married rate" withholding tends to be about right for a single-earner household but underwithholds for a dual-earning couple.

[MDM]

My wife just got a new job, we don't know what number to put for line G, Child Tax Credit.  Here's our info:
We have two children, aged 4 and 1
My salary: 71,000
Her salary: 75,000
cash in lieu of insurance: 6,000
Additional information: we are planning to stash 36,000 into 403B plans, and may put an additional 18k into a 457 plan, if this changes anything. 

Rather than dealing with the intricacies of form W-4, from which you still need to translate "number of allowances" into "dollars withheld", you might calculate now your total tax due in April 2017 and then make sure your withholding is sufficient.

E.g., it makes a big difference if "just got a new job" means "after not being employed at all this year" vs. "that will pay $1K/yr more than the job she used to have."

See http://forum.mrmoneymustache.com/taxes/best-way-to-calculate-w-4-exemptions-for-2016/ for similar discussion.

[aceyou]

Thank you. 

Her salary was 60k last year, so this is a 15k increase for her in the new position.  Not a lot for many on here, but it'll do a lot for our ability to fill up more retirement buckets. 

[MDM]

Her salary was 60k last year, so this is a 15k increase for her in the new position.

25% increase?!  Way to go!

[cacaoheart]

Given that the phaseout is based on a MAGI above $110,000,  if you're putting ~$54,000 into 403b and 457 accounts that takes you well below $110,000.

https://www.irs.gov/uac/ten-facts-about-the-child-tax-credit

[aceyou]

Given that the phaseout is based on a MAGI above $110,000,  if you're putting ~$54,000 into 403b and 457 accounts that takes you well below $110,000.

https://www.irs.gov/uac/ten-facts-about-the-child-tax-credit

Yeah, that's what I was wondering.   I was hoping to be able to get the best of both worlds...make a lot of money, shelter a lot of money, still get the tax credits.