What to do with spousal income?

[zback]

Wife is going to work part time (10-15k yearly) now 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. I already max out a Roth for her. I don’t think she will have any retirement account offered through the job. Recommendations?

[Peds]

zback wrote:

I’m trying to figure out how to avoid a extra tax hit from that.

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well for one, stop working.

zback wrote:

I already max out a Roth for her.

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doesnt change taxes.

zback wrote:

I don’t think she will have any retirement account offered through the job.

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you dont say if she is 1099 or W2. that will change the answer.

[ZZZ]

She can't think of any better ways to keep herself busy than some trivially low paid job? Unless part time means single digit hours per week, that seems like a pretty bad time for $ trade.

No idea what you make, but she could probably save you more than 10k annually by spending that time learning about personal finance and optimizing your situation.

[pierre]

Spend it on something nice

[CordMcNally]

Let her do whatever she wants with it.

[wideopenspaces]

I feel like this question is best posed to your wife . . . ?

[Larry Ragman]

If her employer offers a 401k, max that out for additional tax deferred space. Otherwise, of course, she will be taxed at your marginal rate.

[Larry Ragman]

Oh, I see from OP one is not offered. Then I’m not sure there is a way around the taxes.

[Tim]

How about an old fashioned IRA instead of the fancy Roth? Peds pointed towards a solo 401k if she can swing it 1099.
Contrary to some, you are a lucky man. Say thank you if she decides Gross Pay is for a nice vacation and she invites you. She could really use a break if she can get timeoff approved. Respect her efforts. It’s not all about the Benjamins.

[Peds]

Tim wrote:

How about an old fashioned IRA instead of the fancy Roth?

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over the income limit...

[zback]

Going to be W2 income for her. Household income is in 35% bracket

[DCdoc]

It’ll probably cover her gas to drive to work, and the food she’ll eat while working, after taxes are paid. I guess you could take a week per year of vacation “on her.”

[wonka31]

I mean even if you're in the 37% tax bracket plus state taxes, you'll pay maybe 40% 'off the top' in taxes, leaving 60% gross. So you still have $6-$9k left over and that's not nothing. If you don't need it, I'd say invest half and spend the other half on whatever the heck you two want to. Although it's not life changing money, that's a lot of money to some people. For you, that covers a great vacation, multiple 529 contributions if you have kids, a few mortgage payments, fun money, etc. If she likes the work and can make that much while doing it, good for her.

[Lordosis]

My wife's work after taxes barely covers the child care. But if keeps a foot in the door for her and she wants to do it. Even if it was a small loss I would not oppose if she wanted it.

[ZZZ]

"I mean even if you’re in the 37% tax bracket plus state taxes, you’ll pay maybe 40% ‘off the top’ in taxes"

FICA plus state tax probably gets to almost 50% marginal.

If you're in the 35% bracket (408-612k mfj) like OP said he is, gotta be a pretty sweet gig to justify the bother for 5-8k post tax. And if it's that sweet, why not full time?