Need a little help filling out form IT2 for taxation as a married couple

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MissSherry

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Hi there, I have a few queries about filling out form IT2 for the taxation of a married couple, if anyone can help I’d appreciate it as I have a lot to learn about tax.

We got married in August. I’ve been self-employed since Feb of this year (so won’t have to make my returns until next year) and I estimate that my income this year will be about 28k. My husband is PAYE and his income is 46k.

My questions are..
1. Who should we elect as the assessable spouse? (the woman in revenue suggested we elect me but i'm not sure this is right as i earn less?)
2. As we're on different tax bands is joint assessment the way to go?
3. whats the best way to allocate the tax credits/standard rate bands? I've copied and pasted this part from the form here:
(b) We request that our tax credits and standard rate band be allocated as follows:

Tax Credits:
Assessable spouse: €______
Spouse: €_________

Standard Rate Band:
Assessable spouse: €______
Spouse: €_________

or
If you are already being taxed as a married couple and wish to have your tax credits and standard rate band allocated as at present, please tick this box

or
If you wish to have your tax credits and standard rate band divided equally between you, please tick this box

or
If you wish to have transferable tax credits and standard rate band allocated to the assessable spouse, please tick this box;

Would really appreciate any help and guidance on this. Thanks very much.
 
1. The self-employed person is normally the assessable spouse but it doesn't really make any difference*

2. Joint assessment is the way to go, especially if you are on different tax bands.

3. Divided equally is the way to go IMO. You could give your husband some of your 20% band (€9,000 max) but when you do your income tax return every year then you won't have this €9,000 so if you keep your own bands then there will be no nasty surprises come October.

* If you're planning a massive fraud in the future you should select your husband though because he will go to jail then!
 
Thanks for the advice DB74. I'd like to just check if most other people agree with you on dividing the tax credits equally (it does seem to make sense) and then i'll fill it out. Thanks!
 
No worries

Just to give you an idea of the figures

If you don't transfer anything to your husband, you will have a PAYE bill in October 2012 of roughly €2,942, calculated as:

€28,000 x 20% = €5,600 less personal credit of €1,650 = €3,950

Your remaining 20% band of €4,800 will be used to reduce your tax bill because it will be utilised against your husband's income when you do you tax return and you will reduce your tax bill by 21% of this = €4,800 x 21% = €1,008

Total tax bill will be €3,950 - €1,008 = €2,942


If you give all your tax credits and cut-off to your husband then his take home pay will increase by €3,540 over the course of the year (€68.08 per week or €295.00 per month)

However your tax liability next October will now be a whopping €6,482, calculated as

€23,800 @ 20% = €4,760
€4,200 @ 41% = €1,722
Total PAYE payable of €6,482

No tax credits to reduce this because your husband has them

You should note that the ACTUAL final PAYE paid is the exact same but it's a cash-flow issue

I have ignored PRSI & Levies because there is no cash-flow issue with them.
 
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