Just trying to gauge everyone's experience before deciding to go to a tax accountant
We are a family of 4 (2 kids). Wife is not working to look after kids. I am the only one working presently
Had a casual chat with wife's friend a few weeks ago. They are family of 3 (1 child). Difference is, they're both working parents.
We went into discussion around tax and income and what we found out was that despite their combined income being less than mine, my take home pay is lesser than them.
ie they are both ~$80-100k income each whereas I am on ~$200k.
We had a laugh initially but thinking about it, their work hours are significantly lower than mine. I work for a bank and needless to say, the extremely long hours, probably longer than them both combined to be frank to get a good bonus.
Am I missing something here when it comes to tax return? I dont mind going to a tax accountant if this is a complex matter, but with my limited knowledge i thought my tax return would be pretty straight forward too as there arent any complex holding structures etc.
I would have thought a fair tax system would look at combined income for a family and apply the tax bracket accordingly?
Thanks guys for all the responses - I guess my key takeaway is there are ways to optimise our tax positions so we will look into this.
But just to play back a few scenarios that really struck me and got me thinking
Sc1: Person 1 works 8 hours, gets $100k, pays fair share of tax
Sc2: Person 2 works 16hours, gets $200k, pays more (but fair share) tax. Absolutely silly some would put. Thats not our way of living they say, so you deserve to pay more tax. I get it that this is the same worldwide.
Sc3: Person 1 and 2 gets married, Person 1 takes a career break after having kids. Well mate, you are working too hard, get your partner to start working again to get better tax treatment. At the same time, you go get a lower paying job if you dont want to pay tax (huh what?)
Sc4: Person 3 and 4 are also married, earning the same as Person 2. Oh come on OP, person 3 and 4 are hardworking so they deserve better tax treatment than Person 1 and 2! Get on with life.
Sc5: Person 2 asks if he was missing anything in tax return. Didnt make sense (to him) that dual earner earning the same income as single earner is paying less tax. Oh OP, you are such an entitled, selfish person, who cant comprehend that you are asking for a better tax treatment putting others at risk of subsidising your partners living. Its your fault for working 16hrs and you deserve to pay more tax. Your partner is not working so your family deserves worse tax treatment. Dont get those that work normal hours to pay for your partners time at home watching TV.
Sc6: Person 2 asks, what happens hypothetically if Person 1 is no longer able to work. Does that change the argument? No one gave an answer. This is not the scenario for Person 1/2, but there are families like that in Australia.