What to do with spousal income?

[Lithium]

spotty_dog wrote:

Lithium wrote:

I guess I understand why in a semi-recent thread, the OP somewhat confusingly went out of his way to refer to his spouse as “they.” It’s really a shame that this thread is probably going to get locked because of gender dynamics issues that I don’t think are germane to the financial question. Of course, from a tax standpoint, whether the spouse is a man or woman makes zero difference.

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LOL. If the spouse in question were male, with either a male or a female dawkter spouse, it would still smack me as misogynistic to characterize the non-dawkter’s paid work as less subject to the consideration of “do they want to do it and is it worth it to them” than the dawkter’s. Some things cross gender lines. And if this is the kind of thing that gets threads locked these days, my observation about the forum holds.

(Signed, Girl who did not hold with “modern feminists” as a youngster, but who’s getting feisty near her 40s.)

Click to expand...

Say what?  If both spouses were hypothetically male, there's really a misogynistic way to frame this?

Serious question:  Do you have a grudge against "dawkters?"  I'm curious to understand why you choose that pejorative spelling, yet participate in a physician finance forum.

[Panscan]

This conversation has nothing to do with gender. The math and calculus is unchanged by each spouses respective gender. The math is unchanged by the spouses occupation. Money is money

You're the one cussing people out acting like a child because they disagree with you and writing "dawkter"

[gap55u]

Everyone on this thread who is talking pure math is missing a few points in my opinion
1) the OP didn’t ask should my spouse work, they said my spouse will be working, what’s best. There are undeniable benefits to work compared to being exclusively at home, even if it may not by the math make sense (or be a small bet negative or only a small positive ) It does devalue the lower earning spouse to be so dismissive. Maybe it’s not misogyny. Edit: to keep this thread from potentially being closed, removed a term.  There is a lot of income disparity on the forum and in real life.   Those making 30K or 50K oftentimes have very different attitudes from those making 250, 500, or more - ditto their spouses.

2) anyone heard of behavioral finance? This is kind of like that. We have some posters acting like we should all be 100% rational actors. We aren’t.

 

[Panscan]

Classist? Again lets be mature and not ascribe character attacks for disagreement. No one said the spouse is useless. I have no idea how misogyny gets thrown into the mix. Again the conversation is no different for each gender spouse and high earner.

Yes I understand fulfillment and social interaction of working.

It's absolutely ludicrous to throw out insults and assign labels because someone disagrees with you. Grow up. Nothing that has been said is sexist or Classist whatever the heck that means. It's just people disagreeing.

Thin skin.

[ZZZ]

GPGP

"2) anyone heard of behavioral finance? This is kind of like that. We have some posters acting like we should all be 100% rational actors. We aren’t."

Absolutely. Glad to see you agree that the decision being made isn't rational.

[jfoxcpacfp]

I believe the reason a few people are annoyed is because some participants jumped in with responses that didn’t answer the OP’s question. It was obvious that the math was not optimal but OP specifically stated that the reason for wife’s side job was not to add to the household’s finances, but “to keep her busy, all of her income will be disposable. I’m trying to figure out how to avoid a extra tax hit from that.”

OP specifically stated this income was disposable. This is no different than a doctor working beyond FI for the personal fulfillment. But some of the comments implied that the wife was doing damage to the bottom line simply because she chose to work 15 hours a week. It’s really not our business why she is not working full time, donating her time rather than taking a paycheck, or staying home with the kids (“where she belongs” could be taken as implied).

Sometimes, unsolicited advice is unhelpful and even appears belittling, especially when a poster obviously already has a solid understanding of the answers to the unsolicited advice and is simply looking for creative solutions beyond the run-of-the-mill responses proffered. Just my .02, fwiw.

[zback]

Yeah I am just trying to figure out if I can open a 401k for her if she isn’t offered one through work?

[Tyche]

Also, the ones belittling her going back to work assume they have children / children in the home. Most couples do but I suspect had OP said "kids are out of the house, wife has decided to go back to work part time" the judgment calls on whether or not she SHOULD would not have been made.

 

 

[jfoxcpacfp]

zback wrote:

Yeah I am just trying to figure out if I can open a 401k for her if she isn’t offered one through work?

Click to expand...

No, sorry. You mentioned earlier that she will receive a W2, which prohibits a retirement plan other than through her employer. Is it possible she could negotiate to be paid as an IC and receive a 1099? In this situation, much preferred. Would probably be an unexpected request and payer might be open to it as it would benefit them financially.

[Anne]

zback wrote:

Yeah I am just trying to figure out if I can open a 401k for her if she isn’t offered one through work?

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Is she dead set on an employed position?  If she were self employed she could open a solo 401k.  If not she can't.  But a lot of appeal of work can be the social environment.

When I was in high school my first job was in retail where I worked alongside a very nice woman who was married to an orthodontist and had 2 young children.  She worked a few hours a week and the job was barely above minimum wage.  She was a SAHM and started the part-time work when her kids were in school.  Actually, she started in in the summer after they had both started school and were now home 24/7.  It didn't make sense to me then but it sure does now.

And I disagree the topic is misogynistic.  Assuming the female will always be the low earning spouse on the other hand...I do think some forum members tend to be overly critical of people who make work decisions where earnings are not the number 1 factor.  Assuming your finances are in order, life satisfaction trumps complete financial optimization IMO.

[childay]

Anne wrote:

Assuming your finances are in order, life satisfaction trumps complete financial optimization IMO.

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Strange thread with all the drama.  Saw this earlier today.  Maybe needs own thread though the concept often discussed

https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2734064?guestAccessKey=679dfff6-ea8e-4d2a-bbcf-34a85fd8d06d&utm_content=weekly_highlights&utm_term=060819&utm_source=silverchair&utm_campaign=jama_network&cmp=1&utm_medium=email

 

[Craigy]

What to do with the income?  Increase her withholdings appropriately.  Then there is no extra "tax hit" when it comes time to file.

Really though the best thing would be to just forget about it.  Assuming $10k/year, this is likely $5k/year tax 'problem' at the most.

Count your blessings that her activity actually produces an income.  Many big earners will spend tens or even hundreds of thousands of dollars on various businesses to keep their spouses busy.  One friend used to bleed something like $10k/month on his wife's seasonal decoration company which has operated in the red for years, employing the in-laws etc.  Recently I saw a online post (maybe here??) about a husband who was regularly blowing thousands on horrible investment opportunities, etc.

Regardless, a good problem to have.

[spotty_dog]

Lithium wrote:

spotty_dog wrote:

Lithium wrote:

I guess I understand why in a semi-recent thread, the OP somewhat confusingly went out of his way to refer to his spouse as “they.” It’s really a shame that this thread is probably going to get locked because of gender dynamics issues that I don’t think are germane to the financial question. Of course, from a tax standpoint, whether the spouse is a man or woman makes zero difference.

Click to expand…

LOL. If the spouse in question were male, with either a male or a female dawkter spouse, it would still smack me as misogynistic to characterize the non-dawkter’s paid work as less subject to the consideration of “do they want to do it and is it worth it to them” than the dawkter’s. Some things cross gender lines. And if this is the kind of thing that gets threads locked these days, my observation about the forum holds.

(Signed, Girl who did not hold with “modern feminists” as a youngster, but who’s getting feisty near her 40s.)

Click to expand…

Say what?  If both spouses were hypothetically male, there’s really a misogynistic way to frame this?

Serious question:  Do you have a grudge against “dawkters?”  I’m curious to understand why you choose that pejorative spelling, yet participate in a physician finance forum.

Click to expand...

Yeppers. In my naive youth I would never have believed in the "patriarchy", but this conversation is just dripping with it. Like calling someone a "male nurse", discussing whether the at-home spouse ought to work for pay, or whether their work will fail to cover expenses like work clothing and daycare and tax burdens that are high because of the primary earner's high taxable income, has its roots in that whole systemic bias, I'm sorry to say.

And I do apologize, that "dawkter" spelling is an old habit. I've been chatting for over a decade with a group of physician spouses, a group to which most have cleaved while our medically-entrenched significant others were mere residents but still quite full of themselves because of their profession. In that group we frequently distinguish between "doctor" as a profession and/or honorific, and "dawkter" as a loved one who sometimes gets too big for his or her britches. :lol:

I'm also very sorry for the expletive! Promise I'm not a cusser, but dang. Sometimes a phrase just fits, LOL.

[PedsFIRE]

Doesn't really help with taxes, but I would just sit down with your wife and ask what she would like to do with the money since it sounds like you got budget/savings taken care of with your income (sounds like you already maxed tax-advantaged accounts). Whether its adding more to taxable, increasing charitable contributions, accelerating mortgage payoff (if you have one), increasing 529 contributions, great vacations, etc. it will still be productive to building wealth/well-being. This way, your wife is motivated to work because she has input on how its used but the money still gets put to good use.

[RogueDadMD]

My wife has worked our entire marriage and gone between part and full time depending on both kids and my schedule and her schedule.

We’ve had times where we lost $ on her income to pay for childcare as she worked part time in a low paying job and went to grad school (I recognize the childcare wasn’t just for her benefit but I hope everyone knows what I mean without this being a debate).

Even recently we’ve had a very long stretch where yearly childcare costs exceeded her yearly after tax income (we’ve always maxed her 401k). By long I’m talking two YEARS.

She doesn’t want to be a SAHM.

She *wants* to work and has been said she would be full time if it weren’t for having 3 young kids and a husband with an ER doctor schedule. Even full time her income would be maybe 40% of mine — we would incrementally make far more $ if I worked more shifts.

However she’s also tired of me working extra shifts (I work from 0-3/month depending on how short staffed we are or if we have a major splurge coming up) since that puts more workload on her to run the house and deal with 3 exhausting boys. It of course also takes away from my time with kids and with her and her ability to do things.

It’s not always about the marginal dollar. It is about math, but there is a relative as well as an absolute value to the dollar. We are in a financial position where we can think that way, not everyone can.

OP it sounds like there isn’t a good investment vehicle to shelter the $ short of changing employment status.

You could put it into a different bucket that brings emotional worth. Put it all to charity and have her decide where it goes (open a DAF), make it the vacation fund, make it the landscaping or remodel account. If she has some expensive hobby let it all go to that.