bibiphoque
Registered User
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- 12
We are on two incomes at the moment, both on the marginal tax rate, currently doing 2 separate tax returns.
We have a decision to make for next year as my partner is expecting twins.
She is a contractor and will not get anything from her company when she stops working to go on the maternity benefit. We are planning for her to stay home after that (at least for a few years anyway).
We are planning to rent our property (2 beds apartment) and rent a 3 bedroom house.
Now the question: purely for tax reason, should we get married?
If we are married and do a joint tax return, my marginal rate will go from €32K to €41K (~€1900 saving per year) and I get her tax credit (~€1650 saving) so in total we save €3550 per year (€300 per month).
However, the rent income will be taxed at the marginal rate...to make it simple, let's say we rent our place for €1000 per month, we would owe €4920 of tax (before tax relief, and I also need to add the PRSI and USC on this...).
Finally, her maternity benefit will be taxed if I understand correctly the budget '13?? Is that on the marginal rate because of my income?
The other solution is to not get married and keep filling in 2 tax returns.
Her maternity benefit will not be taxed that way, and she could declare the rent income as it will only get taxed on the lower tax rate instead of the marginal rate if I was going to declare it. Is that legal?
We have so many changing factors, and with the new budget it is hard to make the right decision...
What would you do in our situation?
We have a decision to make for next year as my partner is expecting twins.
She is a contractor and will not get anything from her company when she stops working to go on the maternity benefit. We are planning for her to stay home after that (at least for a few years anyway).
We are planning to rent our property (2 beds apartment) and rent a 3 bedroom house.
Now the question: purely for tax reason, should we get married?
If we are married and do a joint tax return, my marginal rate will go from €32K to €41K (~€1900 saving per year) and I get her tax credit (~€1650 saving) so in total we save €3550 per year (€300 per month).
However, the rent income will be taxed at the marginal rate...to make it simple, let's say we rent our place for €1000 per month, we would owe €4920 of tax (before tax relief, and I also need to add the PRSI and USC on this...).
Finally, her maternity benefit will be taxed if I understand correctly the budget '13?? Is that on the marginal rate because of my income?
The other solution is to not get married and keep filling in 2 tax returns.
Her maternity benefit will not be taxed that way, and she could declare the rent income as it will only get taxed on the lower tax rate instead of the marginal rate if I was going to declare it. Is that legal?
We have so many changing factors, and with the new budget it is hard to make the right decision...
What would you do in our situation?