Income tax PAYE wife Self Employed

Hi

I am filling out for 11 online for the first time, so this all very new having been PAYE all my working life.

I am PAYE and earn approx 93K pa after pension etc. At the moment I take the married tax and other credits.

I am not sure if we can claim the home carers anymore.

My wife started a small business in 2010, teaching. For 2010 my wife's income was €1.6K and for 2011 will be approx €5K.

The final tax bill is coming out at €700 (almost 1/2 her income). if this holds for 2011, then we are facing a bill of €2.5K for the extra €5K.

Am I missing something, as it seems everything my wife earned is being charged tax at the higher rate.

I should add that I think the SRCOP is not being increased - the system is allowing €45400 at 20%, I thought that we would be allowed up to an additional €27400 at 20% (the increase), so the €1.6K should be charged at 20%?

It sounds like the tax office system is treating you as a single income couple.

However, based on the low income of your wife, it is more beneficial to retain the home carer's credit of €900 for 2010 than apply for the increased SRCOP, since the increase in the SRCOP of €1600 would only save tax of 21%x€1600 = €336 (as opposed to €900 for the credit).
Under the rules, it is possible for the home carer to have an income of up to €5080 (2010 rate) and retain the full home-carer's credit. The credit is reduced by half of the excess over €5080 (again, 2010 rules- I don't know what change if any occurred in the last budget), so it 'breaks-even' at an annual income of €6880.

Information leaflet:

Thank you for the reply

Also please make sure you claim your paye credit, if i had a euro for everytime someone missed this id be well rich

Thanks - I have claimed the PAYE allowance for myself. My understanding is that because my wife's income is not PAYE it cannot be claimed as it is not a transferrable allowance.

I am just putting her income as 'fees', as it so small - is this correct. I don't think there is much point doing accounts for such a small income. we did not keep receipts for purchases she made in relation to the work and as it is at home, the heat and light use would be small and hard to quantify.

Jester said:

I am just putting her income as 'fees', as it so small - is this correct.

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Why not just record it as 'teaching' in the self-employed income area of the return? Any other treatment will just confuse Revenue.