Currently both my husband and I are working. Have 2 small kids want to stay home with them, this will drop us into a lower tax bracket. How can this help us make it on one income for a little while?
2007-09-06 16:06:48 · 3 answers · asked by Jenni C 1 in Business & Finance ➔ Taxes ➔ United States
Depending upon your income your bracket may or may not go down. You will pay less tax but you'll also have much less income coming in.
2007-09-06 16:26:58 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Depending on your income level, it may put you into a lower tax bracket. There are also other factors to consider, your lower income may qualify you for the Earned Income Credit, Other Credits including the Retirement Savings Credit.... You may be able to take other credits or deductions which you were not able to before if your adjusted gross income is lower. You may be able to take more itemized deductions for example medical expenses. If your itemized deductions were limited before they may not be limited this year or may be less limited.
Dont forget to factor in other income including Capital Gains, Retirement (regular or early) distributions, interest, dividends....
Perhaps some tax planning from a good CPA might be a smart move for you.
Good luck,
2007-09-08 02:37:41 · answer #2 · answered by glaciergizzlybear 2 · 0⤊ 0⤋
I recently changed my tax bracket myself. I went from 3 exemptions to 6 and it only changed a little. But I know with kids every little bit helps. Just be careful to follow the steps in the w-4 and you'll be ok, but if you put too many exemptions then instead of getting a tax return you'll be paying taxes. And who wants to give the government more money, right.
2007-09-06 16:19:36 · answer #3 · answered by Christopher W 2 · 0⤊ 1⤋