Reducing Tax Exposure

**wincrasher** · 01-06-2010, 05:05 AM

This isn't a tax site, so you may want to seek advice at one.

But here are a few tips to consider:

Always run filing separate and filing jointly to compare the numbers and see which way costs you less.

Of course you can up your 401k contributions, and she can open her own account to reduce her taxable income. Don't know if you can have 2 accounts and file jointly - like I said, check a tax site.

There are lots of deductions for things you may be doing already - buying a home, energy efficiency improvements, etc.

Either filing separately or jointly, I don't think you are up against a bracket that will make you pay significantly more tax. You will pay incrementally more because you are making more - a nice problem to have.

Good luck!

**Like2Plan** · 01-06-2010, 05:48 AM

Originally posted by vik_ram18 View Post

Hi All - great forum.

My wife got a job offer for $45000 today. I am trying to understand the tax implications of this as we will be filing jointly for the first time. I earn $80000. I contribute 6% of my salary to the 401k plan. Can you please provide advice on the steps we can take to ensure we dont get hit at end of 2010 due to our increase in income.

Is you question how do you reduce your tax liability OR are you just trying to figure out if your withholding is correct?

If you are trying to make sure you have enough withheld, there is a withholding calculator on the IRS site:
link to IRS Withholding Calculator

It is a good idea to run this periodically.

In terms of reducing your tax liability. There are some easy things you can do. (Whether you should depends on your individual situation). One of the easiest is to max out contributions to the 401k. If both of you are eligible for a 401K, you could defer up to 16,500 each or 33,000. A flexible spending account is another means to reduce your tax liability if you have medical expenses (or dependant day care) and if either you or your wife's employer offers one.
You might want to check out tax web site which would have much more specific info on such things as tax credits currently being offered and so on.

**jIM_Ohio** · 01-06-2010, 07:36 AM

In general have the highest earner file with most allowances
have the lowest earner claim 1 or 2 allowances on w-2

In general if both of you file married on allowances, everything will be OK. You did not state if you have a mortgage or not, or if you itemize deductions come tax time.

I claim 12 allowances, have very little taxes withheld, and wife claims only 2- we both checked married- and we still get a 4 figure refund each year.

Are you trying to avoid a tax bill april 15. or just trying to learn more about taxes?

Reducing Tax Exposure