I just can’t understand it-and I can’t take it either!

amother

Mustard

Sun, Sep 15 2024, 4:09 pm

amother DarkRed wrote:

My husband and I both work for companies with free health insurance. A bit overkill, I know Confused

. The thing is it's not like you always get a choice. This is how it happened for us, but many don't have that option.

Oy, I hope you're not laid off! That's horrible.

Obviously it's not always a choice but most people don't consider the value of benefits when considering jobs.

Good benefits represent a considerable value and are even better than straight salary because they are not taxable versus a salary.

In general working for a large corporation or the government and you will have a more generous benefit package including health insurance.

It is a significant factor as well as other benefits like matching 3% of 401 (k) contributions which is not unusual.

amother

↑ Lemon

Sun, Sep 15 2024, 4:35 pm

amother Mustard wrote:

I work for an educational institution and stay for the benefits. The salary isn't the greatest (for the stress I deal with) but I get 2/3 of my health insurance covered (which covered 10k in fertility treatments that was desperately needed) , 5% retirement match, paid yomim tovim, and then a bunch of other smaller benefits.

It's not the "fanciest" job, but it is worth it for me

↑ oohlala

Sun, Sep 15 2024, 7:23 pm

Passaic homes are less than those in Brooklyn or the five towns (what many consider in town) of similar size. But they are still very expensive. If you need a house that fits 8 kids you’re talking minimum 800k. Redone, it will be over a million.

amother

↑ OP

Sun, Sep 15 2024, 7:31 pm

I’m originally from BP so to me anything outside of Brooklyn (or Lakewood at this point) is out of town. But even outskirts of those areas can have an out of town vibe.

As far as our mortgage, we bought our home as a fixer upper. We refinanced our mortgage with the home loan we used to renovate our refi. Also after reno our taxes went up…and really I don’t know anywhere in the New York area that’s cheaper. It’s just that I don’t have the pressures typical of the innest of in town places.

amother

↑ DarkViolet

Sun, Sep 15 2024, 8:00 pm

amother Ebony wrote:

Of the top 2 things that are standing out one is OPs 80k-100k job. Because her husband is already making over 500k, her Federal Tax rate is 35% on all of that income. Add FICA 7.5% tax plus state and or city tax and that 80k is only a bit over 40k of take home pay. 24k of that goes to the cleaning help, leaving OP with 16k of actual take home pay for all of her efforts!

If OP wants to work she would be far better off taking a much lower paying job that offers either full health insurance (tax free) or is an educational institution that can give tuition benefit instead of salary straight to her kids schools tuition. She could take a 30k to 40k pay cut and still come out ahead.

The other option is to quit working entirely and take care of her home and household budget on the cheap, also probably coming out ahead financially.

As others have mentioned, consulting a tax expert about ways to lower her DH tax burden is a must. There are often creative solutions that can leagally save a bundle in taxes.

Most people pulling in OPs income would NOT be in OPs predicament. They would proactively strategize to maximize their after tax take home pay.

Like someone said above. That only works if you’re not a salaried employee (doctor/lawyer etc) there’s not much wiggle room on a salary.

amother

Trillium

Sun, Sep 15 2024, 8:57 pm

Playing around with ideas like putting dil on payroll on different ideas on how to pay tuition is not going to solve your problems. The money that you free up is just going to get eaten by something else. You really need to sit down with a professional and sort out your budget. You need a more zoomed out view to figure out what makes sense for your life and what doesnt instead of just moving pieces around and hoping for improvement.

amother

Poppy

Sun, Sep 15 2024, 10:38 pm

amother OP wrote:

5500 mortgage
5100 tuition
3700 health insurance
3500 groceries and household (detergent etc)
1000 cars
2000 support
2000 household help (if I don’t have help I can’t work)
1000 bills
2000 heloc
500 credit cards
800 tzedaka
@100-150 personal care (barber)

No retirement savings right now

youre in a stage of life that has the most expenses. still paying tuition. still paying a mortgage. supporting first and/or second child. Wait a couple of years and you will have more than enough extra.

amother

Blueberry

Mon, Sep 16 2024, 9:55 am

amother OP wrote:

This is not directed at you personally OP but I just need to say If we are struggling making over 600 thousand dollars a year then I just completely give up!

You are either spending way more than you think you are and thinking it is "simple or normal" or Jewish lifestyle is completely out of control!! I am really struggling financially and just am completely out of the realm of even beginning to understand that 650 thousand a year is just not enough for some people. I say this with true sincerity! This is not a bash on OP

farm

Mon, Sep 16 2024, 10:41 am

OP you seem to be in an uncommon situation where your high earner husband has neither health insurance benefits through work nor being a small business owner utilizing tax laws to shield various assets from typical income tax calculations. I think your best bet is for you to transition to a job with benefits (health insurance!) rather than independent contracting.

amother

Lightcoral ↓

Mon, Sep 16 2024, 10:46 am

farm wrote:

What tax laws shield assets under a small business arrangement? Do you mean depreciation for assets purchased in a business? That would not have any meaningful benefit.
Lots of people commented on this thread about the benefits of a self-employment arrangement. However, the benefits are typically not with respect to tax, where there is self-employment tax. If you're referring to the QBI, it completely phases out at their income level.

lamplighter

Mon, Sep 16 2024, 12:20 pm

I admit to know almost nothing about money but I know a lot about problem solving and outsourcing.
OP, it's time to bring in 2 people. The first is a better accountant. Get recommendations and tell them before you even start that your intention in hiring them is to help you figure out how to lower your taxes ie come home with more money. You may even want to ask a few accountants to present you with their plan. You want all the legal options no matter how creative. Secondly you need to hire a financial planner like mesila style. You need someone with fresh eyes to look at your income, lifestyle and the bigger picture and give you advice.
Lastly I was taught financial Brochos come from being scrupulous with masser. Perhaps review your tzedaka spending and the halachos of masser and see if there is a way give more.

amother

Honey

Mon, Sep 16 2024, 6:58 pm

Don't know if someone mentioned, but some people take part of their pay into charitable accounts like OJC, Donors Fund etc. That portion doesn't need to be taxed and most yeshivas and schools allow you to pay tuition with charitable accounts. That would give 5k monthly where you don't need to pay tax plus whatever else you want to give for tzedakah. These days many tzedakahs can be paid this way, saving people thousands of tax dollars.

Just a thought...

amother

↑ Wisteria ↓

Mon, Sep 16 2024, 7:02 pm

amother Honey wrote:

If it's a tax break, you can't choose where the donations go. You can't use it to pay for your own tuition bill. You can donate to the school but only as a general donation.

amother

Daphne

Mon, Sep 16 2024, 7:20 pm

amother Honey wrote:

Only teachers can legally pay tuition from their salary.

amother

↑ Tangerine

Mon, Sep 16 2024, 7:27 pm

amother Honey wrote:

How is this legal?

amother

↑ DarkRed

Mon, Sep 16 2024, 7:45 pm

amother Lightcoral wrote:

I don't think it phases out actually, unless your a specified trade or business. Don't assume you don't qualify - speak to your accountant.

amother

↑ Lightcoral ↓

Wed, Sep 18 2024, 1:02 pm

amother Wisteria wrote:

If it's a tax break, you can't choose where the donations go. You can't use it to pay for your own tuition bill. You can donate to the school but only as a general donation.

That's actually not true. If you donate to a DAF (Donor Advised Fund), such as those frum ones mentioned above, or "regular" ones such as through Charles Schwab, you get the best of both worlds. You get a full tax deduction for donating to charity, but you get "advisory" rights over where the donation goes. Since the DAF sponsor does not LEGALLY have to follow your "advice" (although they always will), you are considered as if giving up control of the funds and thus entitled to a charitable deduction.

None of this addresses the other issue this poster brought up, which is using your DAF to give money to your kids' school instead of tuition. You can't, since you are getting a benefit in exchange ("quid pro quo"). Most people would not risk giving the school money directly and having the chutzpah to call it "donation," but they feel less queasy doing so when it's via their DAF since there's another layer in between them and the school so they feel it shields the obvious quid pro quo. It's still not allowed, even if it's less likely to be caught by the IRS, should they be looking into it.

amother

↑ Lightcoral ↓

Wed, Sep 18 2024, 1:12 pm

amother DarkRed wrote:

I don't think it phases out actually, unless your a specified trade or business. Don't assume you don't qualify - speak to your accountant.

It always phases out at some level of income, regardless of the nature of the passthrough income (ie, if you're an SSTB or not).

Either way, this is all kind of moot. OP's husband likely does not have a sole proprietorship or ownership in a passthrough business, but is just a straight W-2 employee. It's not practical advice to tell him to tell his boss "switch to this other type of business" when you are an employee. Unless they can offer him shares in the business to purchase.

The bottom line is that taxes are killing OP, leaving her with less than half in take home pay. After mortgage and LOC payments, she's not left with all that much. I agree with PP for OP to consider quitting. As PP mentioned, since they are already in the 35% tax bracket from DH's salary, every dollar OP makes is taxed solely - this is, 100% - at 35% (and not marginally). OP, is it worth it for you to have 35% taken off every dollar at the federal level, plus state tax, plus 7.5% payroll tax? Could you significantly cut down on cleaning help if you quit? Or could you reduce your hours to part time, so you're maintaining your skill set as some sort of compromise?