Federal Employee question.. not TSP related
Moderator: Aitrus
Federal Employee question.. not TSP related
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!
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!
Re: Federal Employee question.. not TSP related
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.
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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"It's not what happens to you, but how you react to it that matters" Epictetus
Re: Federal Employee question.. not TSP related
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.
Operation Iraqi Freedom Veteran
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)
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)
Re: Federal Employee question.. not TSP related
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.
Re: Federal Employee question.. not TSP related
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.
Re: Federal Employee question.. not TSP related
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.
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Re: Federal Employee question.. not TSP related
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
Re: Federal Employee question.. not TSP related
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
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
Re: Federal Employee question.. not TSP related
Thank you everyone for your replies. I will take all of it into consideration! I appreciate all of the input
Re: Federal Employee question.. not TSP related
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.
Re: Federal Employee question.. not TSP related
Perhaps. I'm going by what the Virginia tax web site states....jedi757 wrote: ↑Tue Aug 16, 2022 7:32 pmI 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.
"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
Re: Federal Employee question.. not TSP related
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.
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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