Childcare vs Second Income Calculator

How much comes off the SECOND AND LATER children, not off the whole bill. The two readings differ by about a factor of two, and only this one reproduces the published two-child rates: a quoted two-child rate of 585 a week against 332 for one child is a 24 percent discount on the second child and a 12 percent discount on the total. Leave it empty and every child is charged in full.

The salary being judged, for a year and before any tax. Which of two earners you call the second is a choice rather than a fact: the arithmetic is the same either way, and what it means is that this income is the one stacked on top, taxed from the household's existing bracket upward. Enter the gross figure an offer or a payslip states.

How fast this salary rises each year. It compounds the retirement contributions and it is the whole of the raises figure. Leave it empty and the calculator uses the published rate of increase in median full-time earnings, three percent. Setting it to zero says the salary never rises, and then no raises are forgone.

A single flat rate for state and local income tax, charged on the second income alongside the federal rate. Leave it empty if there is no state income tax where you live, which is the case in nine states, and the calculator charges none. It is a stand-in for a schedule rather than a schedule, so a state with its own brackets or its own childcare credit will not be reproduced exactly.

How far ahead the two long-run figures look. Leave it empty and the calculator uses the horizon the career-gap research works over, which is ten years, a figure an expert can change. It has no effect on what the salary leaves this year.

What going to work costs each month beyond childcare: commuting, parking, meals bought out, clothes for work. There is no published average for this, which is why it is asked for rather than assumed, and leaving it empty counts none of it. Twenty round trips a month by car is about 240 at published per-mile costs.

How many weeks in the year you are charged for care. This is not the same as the weeks worked. A full-time place is usually paid for about fifty weeks whether or not the child attends, holidays included, while school-year care such as an after-school sitter is about thirty six. Getting this wrong moves the answer more than almost anything else on the sheet.

The share of this salary going into a retirement plan. It is used only for the long-run figure, not for the year: contributions are money saved rather than money spent, so they are not subtracted from what the salary leaves. The published average is about 7.6 percent of pay. Leave it empty and nothing is assumed to be put away.

The share of this salary the employer adds to the same plan. It is pay that only exists while the job does, which is the reason it belongs in a decision about leaving work. The published average is about 4.7 percent. Leave it empty and no match is counted.

How many children need paid care because of this job. It sets the childcare bill and it sets the expenses the dependent care credit will count, which stop rising after two children: a third child costs money and earns no further credit.

What care for ONE child costs for one week, as a provider quotes it. Where more than one child is in care, the second and later children are charged this same rate less the sibling discount. The figures beside the input are survey averages for the common kinds of care and are meant to be replaced by the figure you are actually quoted.

Everything else the household earns in a year before tax. It is not taxed again here; it is what decides the rate the dependent care credit is paid at, because that schedule reads household income, and it is why the same salary can be worth noticeably less to a higher-earning household.

Which route the childcare is relieved through. The dependent care credit pays a percentage of capped expenses, and the percentage falls as household income rises. A dependent care FSA instead takes the money out of pay before tax, so it saves income tax, state tax and payroll tax together, which for most two-earner households is worth more. Choose None to see the salary with no relief at all. The two routes cannot be counted on the same dollars, so the calculator prices one of them.

The federal rate the household pays on its next dollars of income, not the average rate it pays overall. A second income sits on top of the first, so every dollar of it is taxed at that rate or higher, and using an average rate makes a second salary look considerably better than it is.

What the retirement money earns each year. Leave it empty and the calculator uses the real return the career-gap research assumes, four percent. It is a real return rather than a nominal one, so the answer is in today's spending power; using a nominal return instead gives a larger figure in future dollars that buys the same amount.

Machinery, and NOT an input. The same for the column axis: Excel substitutes into it while filling the grid, and the rest of the time it mirrors Childcare_Weekly.

Machinery. Excel requires the quantity being tabulated to sit in the grid's top-left corner, where it means nothing to a reader, so it is formatted away. It holds Net_Annual_Gain.

The values across the top of the grid: the weekly cost of care for one child, in steps of fifty either side of yours and never below zero. Read a column to hold the cost of care fixed and vary the salary. The middle entry is your own figure.

What the route you chose is worth in money this year. For the credit it is the rate applied to the capped expenses; for the FSA it is the sheltered amount multiplied by the marginal, state and payroll rates together. It is added back to what the salary leaves, so it directly moves both break-even figures.

What the retirement contributions and the employer match this job funds would be worth at your horizon, with the contribution rising at the salary growth and the balance compounding at the return you give. It is reported separately from the year's figures on purpose: it is money put away rather than money spent, so it is never netted against what the salary leaves.

Every tax this income alone attracts: federal tax at the household's marginal rate, any state rate you entered, and payroll tax at 6.2 percent up to the Social Security wage base plus 1.45 percent on all of it. It is not the household's whole tax bill, and it is not reduced by any deduction, because the figure being measured is the extra tax the second income causes.

The monthly cost of going to work, taken twelve times. Zero unless you enter something, because no reliable published average exists for it.

The body of the grid: what the second income leaves for the year, recomputed for every combination of the two axes. One hundred and twenty one cells, each one the whole calculation run again including the credit rate, which changes down the grid because the household income does. It is a component of the grid rather than a result on its own.

The values down the left of the grid: the second income, in steps of five thousand either side of yours and never below zero. Read a row to hold the salary fixed and vary the cost of care. The middle entry is your own salary.

Machinery, and NOT an input. Excel substitutes each value from the row axis into this cell while it fills the grid; the rest of the time it mirrors Second_Income. Change Second_Income, never this: the axis is derived from it, so editing the mirror moves the axis while the grid is being filled and the whole grid comes out meaningless.

The percentage the dependent care credit is actually paid at for this household income. It reads zero unless the credit is the route chosen. Most two-earner households are far below the fifty percent headline, because the first threshold is low and is not doubled on a joint return; above the second threshold the rate falls again to twenty percent, which caps the credit at 600 for one child.

What the year leaves divided by a full-time working year of hours. It is the figure that makes a second income comparable with an hourly rate, and it is usually a good deal lower than the one on the payslip.

The salary at which the kept share of a dollar exactly covers the childcare and the work costs, net of the relief. Below it the job costs money. It charges the full payroll rate on the whole salary, so for a salary above the Social Security wage base it is slightly high, and the status line says so when that applies.

The whole childcare bill for the year, every child, after any sibling discount and before any relief. It is the weekly cost multiplied by the weeks you are charged, so a change to the weeks moves it proportionally.

The weekly cost of care at which this salary would leave exactly nothing, everything else held where it is. Above it the job costs money. It is computed with the relief as it stands now, so at a very different childcare cost the relief itself would change a little and the true crossing moves with it.

The same figure divided by twelve, which is the form most household budgets are kept in. It moves with everything above it and carries the same sign.

How much more the salary earns over the horizon because it rises each year, compared with the same salary held flat. It is the raises alone and nothing else. It is not the lifetime cost of leaving work, which the published research puts at two to four times a salary for every year out and which counts things this calculator does not compute.

What the second income leaves for the year once it has paid its own taxes, the childcare it makes necessary and the costs of going to work, and once the relief has been added back. A negative figure is a real answer rather than a fault: it says the job costs more than it brings in this year, which is what the break-even figures are there to quantify.

How much of every dollar of this salary survives to the end. It is the single most comparable figure here across different salaries, because it is not affected by the size of the salary itself except through the tax and the fixed childcare bill. It reads zero when there is no salary to take a share of.

Reads OK, or explains why the inputs are not valid, or why the answer deserves a second look before you act on it.