2

Next year my boy is going into child care and my wife is returning to work.

We plan to put him in child care for three days a week and two days a week stay at home.

I'm currently trying to figure out whether it's better for my wife to just stay at home for those two days or if we split it whereas we both work 4 days.

I currently earn more than her (I earn about $110k and she earns about 90k) and I'm fairly sure both of our workplaces will be open to part time work if we gave them notice now.

So that means my day off will be more "expensive" than her but I believe there are other considerations

  1. Having a higher tax income means I'm in a higher tax bracket so doesn't that mean I actually save more on tax than her if I don't work the 5th day?
  2. she's due to return to work in January which is the middle of financial year. She's had no income this year whereas I've been working. So therefore, her annual salary for this financial year should be low - so does that mean her income from now till the end of the fin year will be taxed at a lower income bracket?

All this tax stuff is very confusing. I'm tempted to just make a decision based on our gut preference (I'd love to have a 3 day weekend every weekend) but money is going to be tighter so I'd like to at least investigate these options from a financial point of view.

I'm in Australia if that helps.

  • Sorry but I do not know much about the Aussie tax system. At your income levels wouldn't it be better if you both worked full time? That is very high for the US, and that level of income would probably support a full time nanny. – Pete B. Jun 15 '15 at 16:39
  • Okay, it's not Australia, but in the US, some companies cut certain benefits if you work under 30 or 35 hrs/wk. – mkennedy Jun 15 '15 at 19:38
1

Using the http://calculators.ato.gov.au/scripts/asp/simpletaxcalc/main.asp calculator and noting all the caveats (Medicare etc) and assuming everything is proportionate you get:

Option 1

You earn: $110,000 less $28,647 tax = $81,353 She earns: $54,000 less $9,097 tax = $44,903 Total net: $126,256

Option 2

You earn: $88,000 less $20,507 tax = $67,493 She earns: $72,000 less $14,947 tax = $57,053 Total net: $124,546

So, there is about $1,710 in it per annum or $33/week. Long day care will be setting you back $75-185/day so this is pretty small beans.

This is all back of the envelope stuff and probably worth paying a few hundred dollars to an accountant to work it all out.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.