Are You Paying to Work?
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But today, a tax return crossed my desk that just amazed me at the lack of attention being paid to their financial lives:
The couple is a dual-income two-kid family with a fairly middling combined income (for the area) of just over $35,000. (You big city folks can quit gasping now - you can live fairly well around here for substantially less than it takes just to survive where you’re at… :)) He makes the majority of the income, but she also works at a local small business for, apparently, ridiculously low wages - her W-2 reveals gross income of all of $8,900. I thought perhaps she was working for their insurance. But no, his employer provides their insurance.
Within their stack of tax documents are a mass of receipts for day care expenses. To the tune of $11,800. In other words, they are paying $2,900 for the privilege of letting her go to work. Oh, sure, they’ll get a tax credit of $1,440 on those expenses, but that’s still $1,460 in the hole for the pleasure of working a crappy minimum wage job. And that’s before taxes. Or the cost of a vehicle to take you to work. Or clothes for the job. Or a lot of costs that escape me at the moment (Caleb at Hail to Pitt has a nice writeup of the various expenses he’d encounter reentering the work force and what he’d really make returning to work instead of remaining a SAHD). Or, for that matter, the non-financial cost of having your children raised by someone else.
I often see very marginal returns on the second income earner, especially around here, with the second job yielding a dollar an hour or some similarly atrocious time-for-money trade after the various costs are taken into account. But the obviousness of how financially costly this second earner’s job is just amazed me.
