Federal Employee question.. not TSP related

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nweis
Posts: 18
Joined: Fri Dec 29, 2017 10:51 am

Federal Employee question.. not TSP related

Post by nweis »

Hi everyone,

My husband and I are both federal employees. We have one daughter. I am a GS-6 Step 10 and my husband is a GS-14 Step 1.

Is it more beneficial money wise/tax wise to have our health insurance, dental insurance, and vision insurance come out of my paycheck or his paycheck? Or does it not matter? I can't seem to figure it out.

Currently we have the health, dental, and vision family plans coming out of my paycheck but I was wondering if we would save a little more money if all three were to come out of his paycheck since he makes much more money than me and those deductions are pretax?

I hope this makes sense!

Thank you for your time!

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Aitrus
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Re: Federal Employee question.. not TSP related

Post by Aitrus »

I don't think it matters if you are filing taxes jointly. You and your husband's total tax burden stays the same no matter who pays. If you're filing separately, then it would matter. In that case, it's better if he pays because it lowers his overall tax burden. Since insurance fees come out pre-tax, he would pay taxes on a smaller take-home pay (and potentially drop him into a smaller bracket as well), while yours is already low and unlikely to change much due to paying.

If you're filing jointly, the only time it would matter is if you are either 1) picking a different insurance (and thereby paying a different price than you were in the past), or 2) if the insurance prices are based on % of pay (I'm not aware that any of them are currently using this kind of fee structure, but I haven't compared prices in quite a while so I could be in error). If the company is charging based on % of pay, then obviously you paying would be more advantageous.

However, this is my understanding of it. I don't know the insurance side of things nearly as thoroughly as I know TSP. I'm sure there's someone else who knows better than I do, and will hopefully either confirm and/or correct my comments above.
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IRQVET
Posts: 171
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Re: Federal Employee question.. not TSP related

Post by IRQVET »

I’m with Aitus, for tax purposes, it doesn’t matter. But if your wanting more play money, you could just have it taken out of his GS-14 pay.
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Disclaimer: The contents of this thread are known to the state of California to cause cancer. (As they always seem to know more than the rest of us)

jedi757
Posts: 13
Joined: Sat Oct 05, 2013 12:15 pm

Re: Federal Employee question.. not TSP related

Post by jedi757 »

Actually, depending on your state. If you are a federal employee who makes under a certain threshold, which claiming those deductions might help you reach, you dont have to pay state taxes at all. In Virginia you should look upp the threshold but as i remember its low. You would almost have to maximize your TSP contributions and have all the health insurance deductionns to reach it.

jedi757
Posts: 13
Joined: Sat Oct 05, 2013 12:15 pm

Re: Federal Employee question.. not TSP related

Post by jedi757 »

I found it on the Va state tax wesite, id paste the link but my phone wont let me or this site, the threshold in VA is $15k. Look up low income individual credit in and it should show. And it wont matter how you do your taxes. Married or not. When i was a STEP program in college eons ago i didnt make squat and never paid state tax. After i got married and took a job to Italy my husband struggled to find a job and when he finally did he didnt make squat. He didnt have to pay state tax bc he made under the threshold that year. Wefiled married jointly. Maybe your state has something similar and between TSP and health insurance you might be able to get it low enough to save some tax.

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bloobs
Posts: 1436
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Re: Federal Employee question.. not TSP related

Post by bloobs »

jedi757 wrote: Fri Aug 12, 2022 10:54 pm I found it on the Va state tax wesite, id paste the link but my phone wont let me or this site, the threshold in VA is $15k. Look up low income individual credit in and it should show. And it wont matter how you do your taxes. Married or not.
Hmm....I think it does matter if someone who makes $15k files jointly with her GS14 hubby. Because "THEIR" joint MAGI will be way over $15k and therefore not eligible for most low income tax breaks. Generally speaking of course. YMMV.

wingchaser
Posts: 679
Joined: Thu Jan 22, 2009 8:39 am

Re: Federal Employee question.. not TSP related

Post by wingchaser »

IRQVET wrote: Fri Aug 12, 2022 8:41 pm … if your wanting more play money, you could just have it taken out of his GS-14 pay.
I’m in the camp of IRQVET, the Hubby should bear the brunt (60/40, 70/30 split) of most family-related expenses including:

HEALTH INSURANCE
FLEXIBLE SPENDING &
SUPPLEMENTAL DENTAL INSURANCE

both parties need to “maximize”

TSP CONTRIBUTIONS
ROTH IRA CONTRIBUTIONS
LIFE INSURANCE &
LONG-TERM HEALTH INSURANCE

IMHO

I had Duel-Income (for half a paycheck) & what a difference-maker it was. That was last millennium & my focus is on the present (& the future) as it were…

Best of Luck (everyone) in all you choose to endeavor!!!
“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t... pays it.” ~ Albert Einstein

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evilanne
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Re: Federal Employee question.. not TSP related

Post by evilanne »

There are some FEHB plans that. are only available to certain employee groups (e.g. AFSPA) and I believe postal workers have lower premiums for their plans although plans are available to non-postal workers. So you may have more options if either of you work for one of thee qualifying organizations.

With. HDHP/HSA you do have tax advantage and you can contribute up the the maximum amount in pretax dollars for family and/or individual plans.

Generally the individual plans (employee only) are less expensive. It really depends on your needs and health. but you may want to. look at doing individual. & self +1 (daughter) to compare with cost of family plan you currently have and the type(s) of plans that best suit your needs.. If you stick with thee same family plan and file MFJ for taxes, I don't think it makes much difference who's pay check it comes out of. If you opted for an HDHP family plan, it would. make more sense for it come from the higher salary to fully fund the HSA each year.

The other consideration is how close either of you are to retirement. You have to have FEHB 5 years prior to take it into retirement. When you do retire, your premiums are post tax vs pre tax. So. there are other factors you may want to consider. Sorry if all this is confusing, but there are many factors to consider.

Happy Trails :)

nweis
Posts: 18
Joined: Fri Dec 29, 2017 10:51 am

Re: Federal Employee question.. not TSP related

Post by nweis »

Thank you everyone for your replies. I will take all of it into consideration! I appreciate all of the input

jedi757
Posts: 13
Joined: Sat Oct 05, 2013 12:15 pm

Re: Federal Employee question.. not TSP related

Post by jedi757 »

bloobs wrote: Fri Aug 12, 2022 11:09 pm
jedi757 wrote: Fri Aug 12, 2022 10:54 pm I found it on the Va state tax wesite, id paste the link but my phone wont let me or this site, the threshold in VA is $15k. Look up low income individual credit in and it should show. And it wont matter how you do your taxes. Married or not.
Hmm....I think it does matter if someone who makes $15k files jointly with her GS14 hubby. Because "THEIR" joint MAGI will be way over $15k and therefore not eligible for most low income tax breaks. Generally speaking of course. YMMV.
I know I did my taxes correctly. It doesn't matter if you are married. She can look up the regulation on the website to confirm. I used Turbotax and it guided me through.

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bloobs
Posts: 1436
Joined: Tue May 21, 2019 8:00 pm

Re: Federal Employee question.. not TSP related

Post by bloobs »

jedi757 wrote: Tue Aug 16, 2022 7:32 pm
bloobs wrote: Fri Aug 12, 2022 11:09 pm
jedi757 wrote: Fri Aug 12, 2022 10:54 pm I found it on the Va state tax wesite, id paste the link but my phone wont let me or this site, the threshold in VA is $15k. Look up low income individual credit in and it should show. And it wont matter how you do your taxes. Married or not.
Hmm....I think it does matter if someone who makes $15k files jointly with her GS14 hubby. Because "THEIR" joint MAGI will be way over $15k and therefore not eligible for most low income tax breaks. Generally speaking of course. YMMV.
I know I did my taxes correctly. It doesn't matter if you are married. She can look up the regulation on the website to confirm. I used Turbotax and it guided me through.
Perhaps. I'm going by what the Virginia tax web site states....

"You may qualify to claim the Credit for Low Income Individuals (CLI) if your total family Virginia adjusted gross income is below federal poverty guidelines. Family Virginia adjusted gross income includes the total Virginia adjusted gross income for you, your spouse, and your dependents, even if they do not file their own Virginia returns."

https://www.tax.virginia.gov/low-income ... als-credit

jedi757
Posts: 13
Joined: Sat Oct 05, 2013 12:15 pm

Re: Federal Employee question.. not TSP related

Post by jedi757 »

Below is the Virginia tax code, see #16.

https://law.lis.virginia.gov/vacode/tit ... .1-322.02/

jedi757
Posts: 13
Joined: Sat Oct 05, 2013 12:15 pm

Re: Federal Employee question.. not TSP related

Post by jedi757 »

Here is another citing, drill down to federal and state employees.
https://www.tax.virginia.gov/subtractions

Citing from the 2017 Form 760 Resident Individual Income Tax Booklet

https://www.tax.virginia.gov/sites/defa ... ctions.pdf

Section 39 Federal and State Employees - Any individual who qualifies as a federal or state employee earning
$15,000 or less in annual salary from all employment can subtract up to $15,000 of the salary from that
state or federal job. If both spouses on a joint return qualify, each spouse may claim the subtraction.
The subtraction cannot exceed the actual salary received. If you claim this subtraction, you cannot
claim a Credit for Low-Income Individuals or Virginia Earned Income Credit.

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