H&R Block Recommends

We recommend the amount that will save you the most on your FICA, Medicare and Federal taxes, taking into account your adjusted gross income (AGI), your taxable income, and your filing status.

Taxable income is taxed at 25% or greater at these levels:

• Single - $31,850
• Married Filing Jointly - $63,700
• Married Filing Separately - $31,850
• Head of Household - $42,650
• Qualifying Widow(er) - $63,700

If your filing status is Married Filing Separately, we will always recommend you participate in your employers plan. This is because you cannot take a credit (unless you meet particular qualifications, not covered by this estimator), but you can take a limited reduction in income via your employer's plan. We assume your spouse has income in excess of $2,500.

If your filing status is Married Filing Jointly, Head of Household, or Qualifying Widow(er), and your taxable income is greater than the amount listed above for your status, then we will recommend that you participate in your plan. That's because you will get to reduce your income and your tax and therefore get a virtual 25% credit (or more, if you are in a higher tax bracket) in addition to the FICA and Medicare tax savings (generally, 7.65%). This is as opposed to a 20% credit.