Is it true that if I work 6 months per year, it is better than to work for 1 calendar year and take a break for 1 year?
In many cases spanning across years will indeed be beneficial. Deductions: You get to take twice as much in deductions (twice the standard deduction, or itemizing - if you can) when you span over two years than in one.  IRA: You can only contribute in years when you have earned income. You have all the income in year 1 and none in year 2 - you can only contribute in year 1. You have half of the income in year 1 and half of the income in year 2 - you can contribute in both years (up to the limit/earned income, whichever is less). Social Security: You get 4 credits for each year you earned ~16K in. You earned 32K in year 1, and nothing in year 2 - you get 4 credits. You split it in half for each year - you get 8 credits. The list can go on. If you can do the planning ahead of time and can chose the time periods of your work freely (which is not something most people can do), you can definitely plan ahead with taxes in mind. This is called Tax Planning. Yes, if you can split your income up over multiple years it will be to your advantage over earning it all in one year.  The reasons are as you mentioned, you get to apply multiple deductions/credits/exemptions to the same income. Rather than just 1 standard deduction, you get to deduct 2 standard deductions, you can double the max saved in an IRA, you benefit more from any non-refundable credits etc. This is partly due to the fact that when you are filing your taxes in Year 1, you can't include anything from Year 2 since it hasn't happened yet. It doesn't make sense for the Government to take into account actions that may or may not happen when calculating your tax bill. There are factors where other year profit/loss can affect your tax liability, however as far as I know these are limited to businesses. Look into Loss Carry Forwarded/Back if you want to know more. Regarding the '30% simple rate', I think you are confusing something that is simple to say with something that is simple to implement.  Are we going to go change the rules on people who expected their mortgage deduction to continue? There are few ways I can think of that are more sure to cause home prices to plummet than to eliminate the Mortgage Interest Deduction. What about removing Student Loan Interest? Under a 30% 'simple' rate, what tools would the government use to encourage trade in specific areas? Will state income tax deduction also be removed? This is going to punish those in a state with a high income tax more than those in states without income tax. Those are all just 'common' deductions that affect a lot of people, you could easily say 'no' to all of them and just piss off a bunch of people, but what about selling stock though? I paid $100 for the stock and I sold it for $120, do I need to pay $36 tax on that because it is a 'simple' 30% tax rate or are we allowing the cost of goods sold deduction (it's called something else I believe when talking about stocks but it's the same idea?) What about if I travel for work to tutor individuals, can I deduct my mileage expenses? Do I need to pay 30% income tax on my earnings and principal from a Roth IRA? A lot of people have contributed to a Roth with the understanding that withdrawals will be tax free, changing those rules are punishing people for using vehicles intentionally created by the government. Are we going to go around and dismantle all non-profits that subsist entirely on tax-deductible donations? Do I need to pay taxes on the employer's cost of my health insurance? What about 401k's and IRA's? Being true to a 'simple' 30% tax will eliminate all 'benefits' from every job as you would need to pay taxes on the value of the benefits. I should mention that this isn't exactly too crazy, there was a relatively recent IRS publication about businesses needing to withhold taxes from their employees for the cost of company supplied food but I don't know if it was ultimately accepted. At the end of the day, the concept of simplifying the tax law isn't without merit, but realize that the complexities of tax law are there due to the complexities of life. The vast majority of tax laws were written for a reason other than to benefit special interests, and for that reason they cannot easily be ignored.
http://www.bls.gov/news.release/ebs.t05.htm  So... Average american gets 16 days PTO, and 7.6 paid holidays.  None of it required by law.  *Edit: Average american in the first year of their job in 1996.  Didn't bother looking for current rates, as I doubt it has changed substantially.  More current data can be researched and compiled from here: http://www.bls.gov/ncs/ebs/benefits/2013/benefits_leave.htm "The ""more money"" aspect is only true if you ignore the lack of symmetry between employment and contracting. Consulting is another story altogether.  Companies are willing to pay consultants for a number of reasons but the most important is deniability.  If a decision is recommended and goes wrong then the consultants can be sued.  Liability cover is expensive. Cynicism aside, it often isn't cost-effective to keep specialists permanently on the payroll for tasks that are performed once a year. Recently I've noticed that the nature of consulting is changing.  Companies are starting to assemble brains-trusts of internal consultants who can create and manage projects while outsourcing only the labour-intensive data-collection roles.   Expect this to have a big impact on the management consulting industry." Not necessarily. If you have a family you may be less likely to leave your job because you depend on the income a lot more than if you were single or without kids. When you are responsible for the well being of others you will think twice before quitting your job or slacking off. "The big difference is that you get your money earlier at the start. Suppose you start on a random day with payday on the last day of the month (monthly), or on every 2nd wednesday (biweekly), and it takes 3 days for payroll to ""ramp up"" (ie, if payday is within 3 days on your start date, your next paycheck is not on the next payday, but on the one after). If we assume every month has 30 days (to keep things simple), it is an average of 4+5+...+33 days until you get your first paycheck with monthly pay, an average of 18.5 days. For weekly it is a bit trickier Assuming you get hired at a random date here, with * being a paydate: time until you get paid: an average of 10.5 days. So you get your first pay an average of 8 days earlier. Later on, that 3 day thing no longer occurs, and now the company holds an average of 6.5 days of your pay ""due to you"" with biweekly paychecks, and about 14.5 days with weekly paychecks if you have monthly pay. So with monthly pay, on average your bank account has 8 fewer days of  your pay in it at all times.  This happens when  you are first hired, and persists over the length of your employment. Now suppose you save that extra money (on average): Suppose you have an investment at 4% (after inflation).  Over 40 years those 8 days of pay invested at 4% grow to 38 days of pay, a free month. What more, if the company has problems making payroll, you'll get a warning (to, say, look for another job) an average of 8 days sooner, and/or have the money in your account.  Having someone owe you money is usually worse than having the money in your bank account." "The cost of paying tax should be considered an additional financial expense, and the administrative burden of filing those taxes should be considered an additional labour 'expense'. Simplified, your question is asking how to determine whether these additional expenses are 'worth' it. There are many ways to calculate what your time is 'worth'. Consider two situations where you may consider picking up additional part time work at minimum wage: 1)  If you are working 80 hours a week at a stressful but high-paying job, working another 5 hours a week at minimum wage would likely not be worth your time [both because you already make 'a lot' of money, and also because your time is limited and therefore precious].  2) If you are working 20 hours a week at minimum wage, then another 5 hours a week at the same job would likely be worth your time [both because it would increase your income by 25%, and also because it would not put a heavy strain on your light schedule].  These two extreme examples highlight the inferred principle that I think generally applies to weigh such decisions: Competes with: In your specific example, the actual 'work' component will happen regardless of the money aspect. That is, your wife will be providing these services regardless. So your question is essentially ""would it be worth it for my wife to make $5k, given that she would pay tax on that money and would bear the burden of administrating the tax filings etc.?""  We can't answer this directly, because it relates to what your wife values. If doing this would make the activity (which is otherwise just a hobby) an unwanted chore, then it may not be worth the post-tax income. If doing this would not impact her enjoyment of the teaching, but would add on an unwanted ~1 hour / week of paperwork, is it worth spending 50 hours over the course of the year, to earn $5k? I assume the answer then would be ""yes""." Very good point. However, I would say stability.  Say I could just continue doing this one the side of my regular job, couldn't I do both?  Edit: I don't know why I keep getting down voted... I'm literally just asking valid questions. In addition to the other comments there are things like training costs. Lower paid employees tend to turn over more quickly so instead of training one employee for 4 weeks and staying for 3 years you spend 12 weeks over that same time period as the minimum wage employees each only stay for a year. Also, you aren't necessarily scheduling all three people at the same time, it might be 3 part time workers at $12 an hour covering one role vs. one full time $20 employee working 40 hours a week. It depends on the vesting schedule and the likelihood you'll be there long enough to get any vesting. A typical 6 year schedule gets you 20% after 2 years. You already know you'll be there 1 year, so now you need to decide if you'll last 2 years. Unless you know for sure you won't last 2 years, you should take the match on the 4%. Suppose your retirement plan earns 10%. If you leave before 2 years, compared with your 18% you're only behind by 8% return. But if you last 2 years, you'd be making a 32% return on that same amount. After 3 years you'd make 54%, and up it goes from there until you hit a 120% return after 6 years. I'd take the match simply because you have a lot more to gain than you have to lose if you leave early. If you're worried about investing all at once, you can deploy your starting chunk of cash gradually by investing a bit of it each month, quarter, etc. (dollar-cost averaging).  The financial merits and demerits of this have been debated, but it is unlikely to lose you a lot of money, and if it has the psychological benefit of inducing you to invest, it can be worth it even if it results in slightly less-than-optimal gains. More generally, you are right with what you say at the end of your question: in the long run, when you start won't matter, as long as you continue to invest regularly.  The Boglehead-style index-fund-based theory is basically that, yes, you might save money by investing at certain times, but in practice it's almost impossible to know when those times are, so the better choice is to just keep investing no matter what.  If you do this, you will eventually invest at high and low points, so the ups and downs will be moderated. Also, note that from this perspective, your example of investing in 2007 is incorrect.  It's true that a person who put money in 2007, and then sat back and did nothing, would have barely broken even by now.  But a person who started to invest in 2007, and continued to invest throughout the economic downturn, would in fact reap substantial rewards due to continued investing throughout the post-2007 lows.  (Happily, I speak from experience on this point!) "It's correct.   Be sure of your personal opportunity cost and not that you're letting the tax tail wag the dog just to score ""tax free"".  Your upside is $3,700 (single) or $7,000 (married) in taxes saved until you're out of the 0% zone.  Is that worth not receiving an income? Even if your savings are such that you don't need to work for income for a fiscal year, how would this affect the rest of your career and lifetime total earning prospects?  Now, maybe: Otherwise, I'd hope you have solid contacts in your network who won't be fazed by a resume gap and be delighted to have a position open for you in 2019 (and won't give you the ""mother returning to the workforce"" treatment in salary negotiations)." In addition to taking into account your deductions, as mentioned by @bstpierre, you also need to account for vacation, and other time off such as sick days. You also need to estimate what percentage of the year you expect to be working and pro-rate your salary accordingly.  For example it is not uncommon to use 40 weeks out of the year which is about 77% of the time.  Also check to see if you would be eligible for unemployment for the times you are not working.  I suspect not.  But in any case, you might want to use worst case scenario figures to see if it is worth it, especially in this economy. It seems there is never a reason to have a gap. Unless you spent that time watching TV, you were still working, even if the pay was lousy. Even the act of looking for employment is a startup business exploring the sales and marketing space. If you actually wanted that time to watch TV, you can list a sabbatical. Financial benefit? No. No matter whether you are paid based on a salary or by the hour, the frequency of your pay check has no effect since at the end of the year you will have received the exact same amount of money. Psychological benefit? Well, from the many answers and comments on this page that seem to think there is a difference, then apparently there is a large psychological difference. Whether that is a benefit or not, I guess, depends on your personality. break fast is easy to make, lunch and dinner can be prepped on sundays. check out the sundaymealprep subreddit. there are tons of easy to make recipes, and you will save literally thousands every year. if that still doesnt seem appealing, just imagine that you are being paid to cook your own food because that is pretty much what is happening. This article is misleading in it's universality of its findings. It does have a control group, which is a good start, but the findings are based on call-center employees whose functions are almost perfectly suited for remote work. In a way, we already knew this because of how much call-center work is outsourced and outside of provincial management (in other words, most companies don't bother housing customer service call centers at company headquarters). Let's see them try to replicate those results with other industries.   Treating the ability to work from home as a panacea is just as foolish as believing that workers can't ever be remote. The truth is that individual personalities and, more importantly, an individual's work functions are better suited for remote work than others and it takes good management to understand why they take the strategy they take with regards to remote work.   All in all, the study might be a good case study for encouraging remote work among call-center employees, but any further extrapolation of that for other industries is going to be a baseless claim influenced by personal agendas.