Returning to work and married taxes....

[Magpie]

Some questions about taxation for a married couple when one spouse is returning to work after a long period at home.

Husband earns about 47k, Presently taxed as married (1 income), claims home carers tax. Pays fairly low taxes.

Wife will be earning 23k. How does she go about sorting out her taxes?

To make it more complicated, husband will be on unpaid leave for the first 4-8 months of her working. Is it worthwhile or even possible for her to have all the married tax credits for that period and keep the homecarers credit until he returns to work? And then cancel the homecarers and share out the tax credits....how?

Any help much appreciated.

 

[Ciru75]

Cancelling the home carer credit during the year will lead to an underpayment of tax at that stage. If both spouses are going to earn over €10,200 in the year, you can't claim the credit.

On those figures, you'd be best giving the husband the maximum standard rateband of €44,300 and leaving the wife with €26,300. Both will only pay tax at 20% in 2019 (based the husband's unpaid months) and will still get the maximum benefit from 2020 on.

You could give all the married credits to the wife until the husband restarts work and then split them equally (or whatever way suits). She'd pay no tax (just USC and PRSI) until then. That would leave €6-7 of credits going unused each week at the start that you'd have to claim back after end of the year. another option would be to split the credits equally from the start and then wife would pay about €25 tax a week all year but the husband would pay none when he goes back to work until he used up all the credits from earlier in the year. It's a question of cashflow really, a balancing statement from Revenue will refund any extra tax paid.

 

[Magpie]

Ok thanks, so we should cancel the homecarers immediately, from the start of the year?