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tax credits

  • 02-10-2008 2:47pm
    #1
    PinkPrincess26
    Closed Accounts Posts: 118 ✭✭


    Quick question....
    can you claim tax credit for maintenance payments??


Comments

  • #2
    Mike07
    Closed Accounts Posts: 77 ✭✭Mike07


    See

    http://www.citizensinformation.ie/categories/money-and-tax/tax/income-tax-credits-and-reliefs/sep_divorce_income_tax

    Voluntary maintenance payments Voluntary maintenance payments are ignored for tax purposes: the spouse who makes the payment is not entitled to a tax deduction for it and the spouse receiving the payment is not taxed on it. Both spouses are taxed as single people on their other income. If you are paying voluntary maintenance and it is your spouse’s main income, then you may claim the married persons tax credit, rather than the single person’s credit, but you will still have the tax rate band for a single person.

    Legally enforceable maintenance payments Legally enforceable maintenance payments include those made under a court order or ruling, a deed of separation, a covenant or a trust.

    If the maintenance payment is for the benefit of a child then it is ignored for tax purposes. The spouse who makes the payment is not entitled to a tax deduction for it and the spouse receiving the payment is not taxed on it.

    A maintenance payment for the benefit of a separated spouse is taxable for the receiving spouse. The paying spouse does not pay tax on it; it may be deducted from their taxable income. Both spouses in this case are taxed as single people.

    Separated spouses may choose instead to be taxed as a married couple if there are legally enforceable maintenance payments. In this case the payments are ignored for tax purposes; the spouse who makes the payment is not entitled to a tax deduction for it and the spouse receiving the payment is not taxed on it.

    If they wish to be taxed as a married couple they must both confirm this in writing before the end of the tax year. To be eligible they must both be resident in the State and there must be a legally enforceable agreement for maintenance payments. If they are divorced, they must not have remarried.

    The way that maintenance payments are assigned either for the benefit of the spouse or children effects the way that the payment is taxed. This may make a difference to the amount of money actually received so it may be important to seek tax advice before maintenance payments are agreed.


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