Marriage tax...?

Question

If the husband makes $45 K a year and the wife makes $40 K per year, after taxes, is the woman's salary still profitable. Basically what I'm asking is, with child care expenses, taxes, etc would it make more sense for the woman to forgo her salary and become a stay at home mother?

Answer 1

Income after taxes and deductions (but before other expenses) will be more with both working and less with only the husband working. Income after all expenses, such as transportation to and from work, child care, work-appropriate clothing, etc., may be more or less, depending on the amount of those expenses. If child care costs $50,000, then it is better (economically) to stay home. If transportation to and from work, child care, work-appropriate clothing, etc., cost a total of $5 per year, then it is better (economically) to work. In either case, there are also non-financial considerations, such as where she finds greater emotional fulfillment.

Answer 2

$85 k a year, dose not beat just 45K a year, I understand child care and taxes can be an issue, but you can also claim children on taxes. I don't see how lowering the income level of a family would be better.. the ends do not justify the means.. If a person has other reasons, of not wanting to work, stay at home mom etc. that is a different story.

Answer 3

I'm assuming the $45K and $40K are before tax numbers. Federal income tax and social security and medicare on the second income would take around $9000 of that $40K. State income tax on average would probably take another couple thousand, but could be higher or lower depending on where you live. So that leaves around $29,000, plus or minus a couple thousand depending on the state and local tax where you live. Subtract child care expenses and any other expenses of working, see what's left - only you can decide whether it's worth it to you.