Wife returning to work question

[Reni10]

My wife is currently not working and is looking to return to work soon once the kids start school.

At the moment I am working and have her PAYE tax credit and I also am on the top tax bracket so when my wife does go back to work it will only be part time so will possible be only earning about €1000 max a month or about €12,000 a year.

My questions is if I keep my wives PAYE tax credit will she be liable for any tax or USC etc. on her earnings?

I want to make sure it is worth our while having my wife return to work as we would need to pay for some childcare as well and this would potentially cost about €100 a week so to return to work for €250 a week and then have to pay tax etc. out of that and then take out the cost of Childcare it would really not be worthwhile it seems.

Any advise much appreciated...

 

[Joe_90]

You don't have your wife's PAYE Cr. You have the married persons tax credit.

She will qualify for the PAYE tax Cr. of €1,650 in her own right.

No PRSI under €18,000, no USC under €12,000.

You may lose the Home Carers Credit if she has income of her own.

 

[Reni10]

Ok thanks I forgot about the Home Carers Credit, that looks like it would be gone for me if she earns over about €5,000.

So, if she earns over €1,650 she will pay tax on that is what you are saying? But no USC or PRSI.

So on the basis that she earned €5,000 we would be looking at 20% tax on €3,350 which is €670 meaning after earning €5k she would come out with €4,330.

We then would be looking at about €100 a week for childcare which would work out at €4,800 so basically we would loss money by having my wife go back to work!
What a country!

 

[huskerdu]

You said in the first post that she might be earning €250 a week and paying €100 a week in childcare.
In your last post you talked about her earning €5000 a year which is less than €100 a week.

Yes, if she earns €100 a week and pays €100 a week in childcare, she will not have any net earnings, even if she pays no tax.

 

[Joe_90]

Ok thanks I forgot about the Home Carers Credit, that looks like it would be gone for me if she earns over about €5,000.

So, if she earns over €1,650 she will pay tax on that is what you are saying?!

No that's not what I'm saying. If she has a PAYE job she gets a PAYE Credit so €8,250 x 20% - €1,650 = 0 tax!

 

[Reni10]

Ok this is getting more confusing then it needs to be so let me try to ask this another way

How much can my wife earn without paying any tax, prsi, usc etc. and not affect the current tax credits that I have(except the Home Carers Credit)?

It looks like she can earn €5,080 per year and I will not lose the Home Carers Tax Credit that I currently have but if we forego that then what is the absolute maximum she can earn without paying any tax, usc, prsi etc?

I think what Joe_90 is saying is that she can earn a maximum of €8,250 before any tax is applied?

 

[Monbretia]

You're looking at the tax part of it the wrong way, there is no amount you can earn without being charged tax but what happens is the PAYE credit is then taken off whatever the sum of tax is which means in effect that if someone earns €8,250 as in above example, tax at 20% on all of it is €1,650 less the PAYE credit of €1,650 which effectively means no tax due but tax is actually calculated on it initially.