Returning to work from maternity leave: paycheck exemptions

Stephanie2167 · March 2014

HI ladies,

I'm just returning to work from maternity leave and am trying to figure out the best way to maximize our month to month income (Three in daycare, ugh!). I currently put 16% into retirement and just signed up for the flexible spending account for childcare. I currently have claimed no dependants and claim married. Now that we have 3 children, should I claim them on my paychecks? Is it best to leave it the way it is? We usually get a pretty decent tax return so I don't want to mess with that.

Advice?

brij2006 · March 2014

I'm in the camp of putting money in my pocket each month instead of the government saving it for me and earning the interest, then paying me what I've given them, minus the interest they earned off my money.

Tax return = Lost savings potential, no earned interest, and less $ in the monthly budget.

So I would claim the kids on your W4 and plan to not receive a tax return.

jtmh2012 · March 2014

Try playing with this:

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

If both you and your spouse work, it'll help you setup your deductions across both paychecks to make sure you hit about where you should. I like not owing come tax time, but I setup my withholding to minize what the government owes me.

Also, while looking at maximizing "take home" pay. Don't overlook the possibility of staying home and not working. Depending on incomes and child care expenses it does sometimes come out cheaper to not work.

Wulfgar · March 2014

My parents had major issues with tax with holdings because of how much more my dad made than my mom. They would always have my dad claim single zero and my mom could claim a few dependents. Their combined would always move them into a higher tax bracket.

MW claims married 2 and I claim single zero to get back what we feel comfortable with each year. When we have a second child, we may have to do some adjusting but we will see.

hoffse · March 2014

brij2006 said:

I'm in the camp of putting money in my pocket each month instead of the government saving it for me and earning the interest, then paying me what I've given them, minus the interest they earned off my money.
Tax return = Lost savings potential, no earned interest, and less $ in the monthly budget.
So I would claim the kids on your W4 and plan to not receive a tax return.

This. I would really rather owe $50 each year than get a refund.

formerlyGDaisy09 · March 2014

jtmh2012 said:

Try playing with this:

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

If both you and your spouse work, it'll help you setup your deductions across both paychecks to make sure you hit about where you should. I like not owing come tax time, but I setup my withholding to minize what the government owes me.

Also, while looking at maximizing "take home" pay. Don't overlook the possibility of staying home and not working. Depending on incomes and child care expenses it does sometimes come out cheaper to not work.

If you do look into this also consider how difficult it might be to get back into the work force once kids are in school and the earning potential you may sacrifice by leaving the workforce.

shakinros · March 2014

Gdaisy09 said:

jtmh2012 said:

Try playing with this:

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

If both you and your spouse work, it'll help you setup your deductions across both paychecks to make sure you hit about where you should. I like not owing come tax time, but I setup my withholding to minize what the government owes me.

Also, while looking at maximizing "take home" pay. Don't overlook the possibility of staying home and not working. Depending on incomes and child care expenses it does sometimes come out cheaper to not work.

If you do look into this also consider how difficult it might be to get back into the work force once kids are in school and the earning potential you may sacrifice by leaving the workforce.

THIS. And factor in the value of your benefits as part of your compensation.

Also personal fulfillment. Some people don't do well staying at home.

goldiemu · May 2014

As you can see from all the replies, there is so much to consider including taking advantage of pretax programs through your employer to pay for daycare and healthcare etc.

I would work with an accountant not a bookkeeper. Also, if you or your partner's company has a Employee assistance program where you can get this type of advice for free then do that. Alot of big companies provide this type of thing because many have discovered that if their employees are not worried about money then they are more focused and productive.

Returning to work from maternity leave: paycheck exemptions

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