Separate v Joint Assement advice

M

Monbretia

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As I know changes have to be made before end March I am wondering if there is an advantage to changing from separate to joint in following scenario:

Married couple, one paye and one self employed, paye worker on lower rate of tax, self employed person (small home based business in craft area) up to now was making enough to use up their own tax credits (It was just simpler to keep them separate over the years when submitting Form 11)

However now the self employed person who had 2 streams of income from two small businesses, totally lost one during Covid and worked on improving the second one and will not be restarting the original, now here is the question, the second and now only source of income has an Artist's Exemption for tax so there will be no tax on it to use up any credits.

In this case so what if any credits/allowances could they transfer to spouse if jointly assessed? They get the personal credit and were getting the earned income credit up to now but the year 2022 return will have no taxable income for the self employed person.

2021 Form 11 due this year will have combination of PUP/art income (very small)
 
That is too complicated for this hour of the morning, but is there not a guiding principle?

There is never any tax disadvantage to joint assessment.

In other words, you might not gain anything from joint assessment, but you will never lose out by being jointly assessed.

Separate assessment often leads to more tax being paid.

Brendan
 
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Yes I agree Brendan in general that is true :) but life would be a lot simpler if the self employed person could just continue to do their own Form 11 which is very easy to fill (by me) due to so little to put in but it complicates things if both lots of income need to be input (don't ask!) so if there was no benefit to joint in this scenario then no point complicating life for everyone.

If there is a benefit though then they can deal with the complications for the extra dosh!
 
Brian O'Brien said:
My understanding from reading about this on Revenue was that while Revenue says both parents cannot claim the credit for the same child they can for different children as long as they meet the qualifying conditions, which in this case they would appear to do. I didn't confirm it though.
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Have you a link? When I looked at it, I formed the opposite impression, perhaps mistakenly.
 
Re my original question where online can it be changed from separate to joint? I have looked on the Ros page but see nothing there, I registered on the myaccount but don't see an option there either. I have tried ringing Revenue but that doesn't go well unless you have all day to hold on in the offchance you might get to the top of a queue!

It's ok forget it, got through to Revenue and got my answer, it basically doesn't matter, stay separate and opt for review at end of year and any unused allowances will be transferred anyway or opt for joint and can transfer immediately so either ongoing saving or lump sum refund at end of year. Hope I was right info!
 
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T McGibney said:
Have you a link? When I looked at it, I formed the opposite impression, perhaps mistakenly.
Click to expand...

Sorry wasn't paying too much attention so apologies for the tardy reply.

From Revenue

Primary and secondary claimants

This page explains the differences between primary and secondary claimants
www.revenue.ie www.revenue.ie

"Can both parents claim SPCCC?
If you both meet the qualifying conditions, parents or guardians may make a claim for a different child.
Each child must be living with the parent or guardian making the claim. "
 
There are two methods of assessment.

  • Joint and separate assessment; and
  • Separate treatment (single assessment)
Joint and Separate Assessment

The above methods are basically the same. Couples can share tax credits and rate bands. Under Joint Assessment, credits and rate bands are shared during the year. Under Separate Assessment, surplus credits and rate bands are transferred after the end of the tax year.

Separate Treatment

This is, perhaps understandably, confused with Separate Assessment, but it means single treatment. Both spouses are treated as strangers and cannot share credits and rate bands.

Single Person Child Carer Credit (SPCCC)

To qualify for that credit, spouses must not be jointly or separately assessed.

Only spouses who are assessed under separate treatment (single treatment) can qualify.
 
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