Guys,
When a non-working spouse starts working, it becomes a two earner family- married filing jointly. In such a scenario, I would like to know the actions to take with respect to following, Please add if I missed any thing.
- Do I need to adjust my withholding to deduct more taxes from my paycheck?
- Does spouse need to fill in DE4 form that employer has given (California tax, I guess)
- What about Insurance, AD&D, LTD, STD insurance coverage ? I already have these coverage under current employer, Does the spouse also needs to get these coverages from her employer ?
- regarding medical, dental and vision - since my employer plan covers for my family , spouse can decline from her employer. This is clear.
Anything else ?
I am looking for recommendations for above from experienced folks.
When spouse starts working - Tax/Medical/Insurance plan actions to be taken
When spouse starts working - Tax/Medical/Insurance plan actions to be taken
[QUOTE]Do I need to adjust my withholding to deduct more taxes from my paycheck?
All of the spouse's taxable income will be taxed at marginal tax rates and depending upon income may even bump up from one marginal tax bracket to next (say from 15% to 25%, etc). So yes, just normal witholding of federal taxes from spouse's paycheck may not be sufficient. It all depends on total witholdings and total liabilites.
[QUOTE]- Does spouse need to fill in DE4 form that employer has given (California tax, I guess)
I know nothing about this for California tax and hopefully some californians will answer.
[QUOTE]- What about Insurance, AD&D, LTD, STD insurance coverage ? I already have these coverage under current employer, Does the spouse also needs to get these coverages from her employer ?
This is a question that only you can answer. If spouse passes away, would it cause financial hardship for you (both short term and long term), if yes, then you need spouse life insurance.
I generally am not a big fan of ADD.
For LTD and STD, generally companies provide some coverage minimum and purchase of any additional is generally not necessary. After a certain minimum period of disability, social security also covers disability. So, I generally consider purchasing additional disability insurance a waste unless there are some extenuating circumstances. Most disability policies limit the max amount of money anyways, so buying increased coverage generally does not buy much.
[QUOTE]- regarding medical, dental and vision - since my employer plan covers for my family , spouse can decline from her employer. This is clear.
It is a cost / benefit tradeoff. Many times the second insurance company will pick up what the first one did not. So in such cases one spouse goes for premium coverage and the other for bare minimum coverage. But again, you have to look at what your insurance company offers in terms of what is called coordination of benefits.
Perhaps someone else can add some recent experiences with coordiantion of benefits.
All of the spouse's taxable income will be taxed at marginal tax rates and depending upon income may even bump up from one marginal tax bracket to next (say from 15% to 25%, etc). So yes, just normal witholding of federal taxes from spouse's paycheck may not be sufficient. It all depends on total witholdings and total liabilites.
[QUOTE]- Does spouse need to fill in DE4 form that employer has given (California tax, I guess)
I know nothing about this for California tax and hopefully some californians will answer.
[QUOTE]- What about Insurance, AD&D, LTD, STD insurance coverage ? I already have these coverage under current employer, Does the spouse also needs to get these coverages from her employer ?
This is a question that only you can answer. If spouse passes away, would it cause financial hardship for you (both short term and long term), if yes, then you need spouse life insurance.
I generally am not a big fan of ADD.
For LTD and STD, generally companies provide some coverage minimum and purchase of any additional is generally not necessary. After a certain minimum period of disability, social security also covers disability. So, I generally consider purchasing additional disability insurance a waste unless there are some extenuating circumstances. Most disability policies limit the max amount of money anyways, so buying increased coverage generally does not buy much.
[QUOTE]- regarding medical, dental and vision - since my employer plan covers for my family , spouse can decline from her employer. This is clear.
It is a cost / benefit tradeoff. Many times the second insurance company will pick up what the first one did not. So in such cases one spouse goes for premium coverage and the other for bare minimum coverage. But again, you have to look at what your insurance company offers in terms of what is called coordination of benefits.
Perhaps someone else can add some recent experiences with coordiantion of benefits.
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Old-Spice2
- Posts: 1898
- Joined: Wed Jan 17, 2007 11:38 pm
When spouse starts working - Tax/Medical/Insurance plan actions to be taken
>>>Does spouse need to fill in DE4 form that employer has given (California tax, I guess)
Yes, it is advisable. Otherwise the State withholding will be less and you may be penalised when you file your returns.
>> regarding medical, dental and vision - since my employer plan covers for my family , spouse can decline from her employer. This is clear.
You need to work out which is cost effective. Employer coverage for dependends will be costlier than self coverage (as a rule of thumb). Sometime you get credit for declining coverage for dependends.
Yes, it is advisable. Otherwise the State withholding will be less and you may be penalised when you file your returns.
>> regarding medical, dental and vision - since my employer plan covers for my family , spouse can decline from her employer. This is clear.
You need to work out which is cost effective. Employer coverage for dependends will be costlier than self coverage (as a rule of thumb). Sometime you get credit for declining coverage for dependends.
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FreeSpirit
- Posts: 148
- Joined: Fri Jan 26, 2007 10:01 pm
When spouse starts working - Tax/Medical/Insurance plan actions to be taken
>> regarding medical, dental and vision - since my employer plan covers for my family , spouse can decline from her employer. This is clear.
This is tricky as some employers want to know whether your spouse's company has a benefit plan or not. For example husband works for a company A and has good health plan. Wife works for company B with not so good plan. If wife wants to join her husband's plan, Company A plan may charge a surcharge (which can run upto or more than $100 per month) as she's declining her own company coverage and joining her husband's plan. This is a fairly recent phenomenon and is been applicable in last 1-2 years.
This is tricky as some employers want to know whether your spouse's company has a benefit plan or not. For example husband works for a company A and has good health plan. Wife works for company B with not so good plan. If wife wants to join her husband's plan, Company A plan may charge a surcharge (which can run upto or more than $100 per month) as she's declining her own company coverage and joining her husband's plan. This is a fairly recent phenomenon and is been applicable in last 1-2 years.
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FreeSpirit
- Posts: 148
- Joined: Fri Jan 26, 2007 10:01 pm
When spouse starts working - Tax/Medical/Insurance plan actions to be taken
since two people will be working dependent care expenses can be contributed pre-tax by enrolling in Dependent Care FSA. this saves lot of money for two income families.