Wednesday May 16th, 2012

Should my spouse work?

This calculator is designed to help you see the financial impact of adding, or removing, a spouse's income to your household. As with any decision of this type, there are many factors to consider, but knowing your finances is a good place to start. This calculator has been updated to use the new withholding schedules for 2009.

Your spouse could bring home an estimated REMAINING_PAYCHECK PAY_LABEL_LOWER.

**GRAPH**

This is based on a paycheck of GROSS_EARNINGS1 PAY_LABEL_LOWER, which is NET_BEFORE_EXPENSES after withholdings. Based on your entries, you will also have TOTAL_EXPENSES of additional expenses each pay period when your spouse works. This leaves you with REMAINING_PAYCHECK PAY_LABEL_LOWER.

Your Paycheck and Expenses
*Paycheck withholdings:**
Filing status:	FILING_STATUS, with WITHHOLD_COUNT1 allowances
Spouses pay:	GROSS_EARNINGS1 PAY_LABEL_LOWER ANNUAL_INCOME1 per year
DD_CATAGORY1	DD_CURRENT1
DD_CATAGORY5	DD_CURRENT5
DD_CATAGORY6	DD_CURRENT6
DD_CATAGORY7	DD_CURRENT7
DD_CATAGORY4	DD_CURRENT4
DD_CATAGORY9	DD_CURRENT9 (RETIRE_PLAN_PERCENT1 of income)
Net paycheck	NET_BEFORE_EXPENSES
Additional expenses, per pay period, when spouse works:
MSG_EXPENSES1	EXPENSES1
MSG_EXPENSES2	EXPENSES2
MSG_EXPENSES3	EXPENSES3
MSG_EXPENSES4	EXPENSES4
MSG_EXPENSES5	EXPENSES5
MSG_EXPENSES6	EXPENSES6
Total additional expenses	TOTAL_EXPENSES
Net income from spouse's employment	DD_CURRENT8 PAY_LABEL_LOWER

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Definitions

Pay period

This is how often you are paid. Your selections are: Weekly (52 paychecks per year), Every other week (26 paychecks per year), Twice a month (24 paychecks per year), Monthly (12 paychecks per year), and Annually (one paycheck per year).

Gross pay

This is your gross pay, before any deductions, for the pay period. Please enter a dollar amount from $1 to $1,000,000.

Number of allowances

When your Federal income tax withholdings are calculated, you are allowed to claim allowances to reduce the amount of the Federal income tax withholding. In 2009, each allowance you claim is equal to $3,650 of income that you expect to have in deductions when you file your annual tax return. The number of allowances you should claim depends largely on the number of dependents you have and your itemized deductions. This calculator allows from 0 to 99 allowances.

401(k)/403(b) plan withholding

This is the percent of your gross income you put into a taxable deferred retirement account such as a 401(k) or 403(b). While increasing your retirement account savings does lower your take home pay, it also lowers your Federal income tax withholdings. The impact on your paycheck might be less than you think. While your plan may not have a deferral percentage limit, this calculator limits deferrals to 80% to account for FICA (Social Security and Medicare) taxes. Please note that your 401(k) or 403(b) plan contributions may be limited to less than 80% of your income. Check with your plan administrator for details. For 2009, the maximum contribution to a 401(k) or 403(b) is $16,500 per year for individuals under 50 and $22,000 for individuals 50 or older.

State and Local Taxes

This is the percentage that will be deducted for state and local taxes. We take your gross pay, minus $3,200 per allowance, times this percentage to calculate your estimated state and local taxes. Please note, this calculator can only estimate your state and local withholdings.

FICA OASDI

FICA Old Age Survivors and Disability Insurance. FICA OASDI is calculated as your gross earnings times 6.2%. Please note that this calculator does not make any assumptions as to the total FICA OASDI paid for the current year. For 2009, incomes over $106,800 that have already had the maximum FICA OASDI amount of $6,603.00 withheld will not have additional FICA OASDI withholdings.

FICA Medicare

FICA Medicare is calculated as the gross earnings times 1.45%. Unlike FICA OASDI there is no annual limit to FICA Medicare deductions.

Federal tax withholding calculations

Federal income tax withholdings were calculated by:

Multiplying taxable gross wages by the number of pay periods per year to compute your annual wage.
Subtracting the value of allowances allowed (for 2009, this is $3,650 multiplied by withholding allowances claimed).
Determining your annual tax by using the tables below (single and married rates, respectively).
Dividing the amount of tax by the number of pay periods per year to arrive at the amount of federal withholding tax to be deducted per pay period.

Single Withholding Rates*

Annual taxable income between these amounts		Annual withholding	Withhold additional % of income over this amount
$0.00	$2,650.00	$0.00
$2,650.00	$10,400.00	$0.00	10%	$2,650.00
$10,400.00	$35,400.00	$775.00	15%	$10,400.00
$35,400.00	$84,300.00	$4,525.00	25%	$35,400
$84,300.00	$173,600.00	$16,750.00	28%	$84,300.00
$173,600.00	$375,000.00	$41,754.00	33%	$173,600.00
$375,000.00	(no limit)	$108,216.00	35%	$375,000.00
*This information is from IRS Publication 15, Rev. January 2009, for wages paid in 2009.

Married Withholding Rates*

Annual taxable income between these amounts		Annual withholding	Withhold additional % of income over this amount
$ 0.00	$ 8,000.00	$0.00
$ 8,000.00	$ 23,950.00	$0.00	10%	$ 8,000.00
$ 23,950.00	$75,650.00	$1,595.00	15%	$ 23,950.00
$75,650.00	$144,800.00	$9,350.00	25%	$75,650.00
$144,800.00	$216,600.00	$26,637.50	28%	$144,800.00
$216,600.00	$380,700.00	$46,741.50	33%	$216,600.00
$380,700.00	(no limit)	$100,894.50	35%	$380,700.00
*This information is from IRS Publication 15, Rev. January 2009, for wages paid in 2009.

Additional expenses when spouse works

These are any additional expenses that you expect to pay when your spouse works. All of the expenses should be entered as the amount per pay period.