Married vs. Married and living apart

A friend of mine asked me this question about his tax return.

in 2009, he was married so he ticked married on his tax return.

For 2010, he ticked married but living apart and didn't seem to be given the option to be jointly assessed.

I assumed that they can continue to be jointly assessed as she has no income.

On a separate issue, I suggested him to tick the "married" box instead, but he got a message saying that all subsequent data would be deleted.

Are married couples living apart still entitled to the Home Carer's Tax Credit?

From IT 66

The dependent person(s) must normally reside with the married
couple for the tax year.

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Does this mean that the married couple mist live together?

Hi Brendan,

There is actually a leaflet on this, IT3 which explains most of it.

I assume your friends are actually separated as opposed to living apart for work reasons.

I assume in your friend's case he is paying maintenance, if not they are both taxed as single people. In the case where he is paying legally enforceable maintenance to her they must both elect joint assessment in writing. If she has an income separate assessment must apply.

The dependent person referred to in the IT66 is the child or elderly/disabled person, not the caring spouse.

Obviously, if she was earning and he wasn't, reverse pronouns.

Sybil

Mrs Vimes said:

I assume your friends are actually separated as opposed to living apart for work reasons.

...

I assume in your friend's case he is paying maintenance, if not they are both taxed as single people.

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Do you mean judicially separated or still married but living separately?

You can be separated for years without getting a judicial separation.

To quote Revenue:

A couple are considered separated for tax purposes if the separation is likely to be permanent or it has been made legal.

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I was really asking whether the couple were living apart because, eg she is living near family in Cork and his job has moved to Qatar as opposed to "unhappy differences" having arisen.

The OP has stated "married but living apart" that suggests to me that no legal seperation is in place. Therefore my assumption is that in the absence of a formal arrangement the couple are still a married couple.

However as they are living apart they are not eligible for Homecarers credit both of them may be entitled to the single parent credit if both parties are working now or in the future

Black Sheep said:

However as they are living apart they are not eligible for Homecarers credit both of them may be entitled to the single parent credit if both parties are working now or in the future

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The IT66 does not make any reference to whether the carer and the claimant (here: wife = carer, husband = claimant) are living together.

It only says the dependant (ie elderly person or child) has to live with the carer (with exceptions).

Married person's tax credits is the same as one parent family but rateband is higher. Also the child might never stay over with the husband if he doesn't have suitable accomodation so he may not qualify.

Thanks for all that.

They have not entered into a formal legally enforcable agreement yet.

They are living separately and this will be permanent. I am not sure when she moved out but I think it was during the tax year 2010.

So from IT3, he cannot claim joint assessment for 2011. They will have to be assessed separately. This will be expensive as she has none, or negligible income.

If he does a legally binding separation agreement, he can get a deduction for maintenance.

For tax year 2010

Joint Assessment prior to Separation:
The assessable spouse, i.e., the person who is chargeable to tax on the couple's joint income will be:

• Entitled to the married person's tax credit and the relevant standard rate cut-off point for the full tax year. Details of the current amount of tax credits and standard rate cut-off points are given in Leaflet IT1.
• Taxed on their own income for the full year and their spouse's income from the start of the tax year to the date of separation

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So, he should have ticked the Married box, and not the "Married but living apart" box.

Brendan

For 2010, the year of separation, he is taxed as married, given that she has no income this is straightforward.

For 2011 and subsequent, without legally enforceable maintenance, in his case he can have married credit but single rateband:

if the voluntary payments are sufficient to wholly or mainly maintain the spouse, the payer will be entitled to claim the married persons tax credit. However, only single persons standard rate cut-off point is due. The spouse receiving the payments can also claim single person's tax credit against his/her income (if any).

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As Blacksheep said above, if there are children then he would be better off if he could claim one parent family credit (due to increased rateband).

If they sort things out legally, they would likely be in a more favourable position from a tax point of view. They would need to calculate whether they should be taxed as a married couple or whether they would be better off to make the maintenance taxable (if his earnings and level of maintenance allow them to take fuller advantage of her rateband).

Mrs Vimes

Thanks for that.

Do you fancy doing a Key Post on

"tax planning for separating couples" ?

Or maybe it's done somewhere else and we can link to it?

No pressure

Brendan

married but separated

A married couple , both working and jointly assessed, separate ( but not legally.)
How are they assessed for tax? If as single persons what difference will it make to their tax payments?

One keypost as requested.
Comments/queries welcome