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Financial Planning / Tax Strategies


Subject:  Re: Planning for 2005 Taxes Date:  12/27/2004  7:04 PM
Author:  Crosenfield Number:  74969 of 127753

After your wife finishes residency, she will either be self-employed, or be an employee.
Currently, I assume, she is employed by a hospital, and they take social security out of her earnings.
Subsequently, if she is an employee, the group employing her will start from scratch with social security. It is possible that too much social security will be deducted and she'll wind up getting the excess back, or actually applied to other parts of your joint income tax.
The fact that you are confident that your joint income will be a lot more in 2005 than 2004 doesn't mean that in the first half of 2005 you'd have to have more deductions. It is perfectly acceptable to let 2005 start out with tax withheld being the same as for 2004, then reassess when she starts her new job, presumably in July.
If she chooses to be self-employed, estimating what the start-up income will be can get a lot stickier. If a hospital is making a guarantee for the first couple of years, that helps some.
But for now, just leave the withholding as it is.
Best wishes, Chris
Been there, done that.
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