Cohabitating couples & Tax

tinee

Hi all,

Can anyone advise me on cohabitating couples and tax rights? basically im trying to figure out how to save some money..?

poppylady

Wish I could - I'm part of a cohabiting couple and my tax credits etc are classed as a single person. Tried to get more info off revenue but I think I must have been interrupting her tea break as the woman I spoke to wasn't very helpful.

barneystinson

poppylady wrote: »

Wish I could - I'm part of a cohabiting couple and my tax credits etc are classed as a single person. Tried to get more info off revenue but I think I must have been interrupting her tea break as the woman I spoke to wasn't very helpful.

There's not really anything for her to tell you... unless you're married, you're single for tax purposes, simple as. (And don't get me wrong, I'm in the same boat myself :mad: )

Inherently unfair considering that for social welfare purposes you will be treated the same as a married couple, but there you have it. Possibly contrary to European law, but until someone takes a case it'll probably stay as it is.

KevMacI

barneystinson wrote: »

There's not really anything for her to tell you... unless you're married, you're single for tax purposes, simple as. (And don't get me wrong, I'm in the same boat myself :mad: )

Inherently unfair considering that for social welfare purposes you will be treated the same as a married couple, but there you have it. Possibly contrary to European law, but until someone takes a case it'll probably stay as it is.

Revenue have it all stiched up in their favour basically. For example if you are a single parent then you can claim a single parent tax credit as long as the child stays at least one night with you in the year. As soon as revenue hear you are living with someone else, then you lose that credit but are still taxed as a single person, not as a couple.

barneystinson

KevMacI wrote: »

Revenue have it all stiched up in their favour basically. For example if you are a single parent then you can claim a single parent tax credit as long as the child stays at least one night with you in the year. As soon as revenue hear you are living with someone else, then you lose that credit but are still taxed as a single person, not as a couple.

I think it's important to distinguish between Revenue (the organisation responsible for enforcing tax legislation and collecting taxes) and The State. Revenue don't make the rules, they just apply them. It's the Oireachtas or more specifically the minister(s) for finance who you should be complaining about really...

poppylady

KevMacI wrote: »

Revenue have it all stiched up in their favour basically. For example if you are a single parent then you can claim a single parent tax credit as long as the child stays at least one night with you in the year. As soon as revenue hear you are living with someone else, then you lose that credit but are still taxed as a single person, not as a couple.

So if you are cohabiting and have children who gets the tax credits for the children?

KevMacI

poppylady wrote: »

So if you are cohabiting and have children who gets the tax credits for the children?

http://www.revenue.ie/en/tax/it/leaflets/it9.html
here is a link that explains the credit pretty clearly I think. Both the parents are entitled to claim the credit as long as the child stays with either of them during the year , but the credit is lost to whichever of the parents decides to cohabit with a new partner. If both parents find new partners then the credit is lost completely, which seems unfair if both are still contributing to the upkeep of the child.

nompere

KevMacI wrote: »

If both parents find new partners then the credit is lost completely, which seems unfair if both are still contributing to the upkeep of the child.

In 2011:

A single person has a credit of €1,650.

A married couple has a credit of €3,300. Whether they have children or not makes no difference.

A single person with a child has a credit of €3,300.

Two single persons living together between them have credits of €3,300. Whether they have children or not makes no difference.

The pattern here is that a one-person household has one credit of €1,650 and a multi-person household has (in effect) two credits of €1,650.

I don't see anything unfair in this.

It's a different dicussion about the unfairness of allowing the married couple to transfer allowances and bands between each other when an unmarried couple may not.

mytaxreturn

Im an accountant and do a lot of returns for married couples..
If your not married and have kids and one partner on low income your are losing at least €2500 a year in tax (assuming your paying tax)
This is even higher if the partner pays tax at the higher rate...
So there is a financial benefit to getting married !

Tombo2001

There is only a saving in being married if one couple is stay at home.

mytaxreturn

Untrue tombo...
Both can be working and if one is one less than €23800 its worth transferring their cut off point to avoid tax at 41%
There is also the carers credit when one spouse is on an income below €7000.

Kungfu

I and my partner are cohabitating. We have one child and another on the way. My partner is not working. She is a stay at home mother. Apart from my income the only other income is the child benefit my partner is receieving for our child. Is my partner still entitled to her tax credit? If so, can this tax credit be transferred to me, so that I can claim the same tax credit as a married worker?

relax carry on

Kungfu wrote: »

I and my partner are cohabitating. We have one child and another on the way. My partner is not working. She is a stay at home mother. Apart from my income the only other income is the child benefit my partner is receieving for our child. Is my partner still entitled to her tax credit? If so, can this tax credit be transferred to me, so that I can claim the same tax credit as a married worker?

Unfortunately no. Transfering credits or rate bands between couples can only happen under joint assessment which can only be applied if the couple is married or in a civil partnership.

http://www.revenue.ie/en/tax/it/leaflets/it2.html

mytaxreturn

Civil partnership cheapest option !
To be married in the eyes of Revenue you need to fill in the assessable spouse form
Then go claim the credits, adjust the cut off points and claim carers credit if you have kids and one spouse in on income below 7,000 per annum.....

Could be a saving of at least €2,500 in your pocket....

Itchianus

mytaxreturn wrote: »

Civil partnership cheapest option !
To be married in the eyes of Revenue you need to fill in the assessable spouse form
Then go claim the credits, adjust the cut off points and claim carers credit if you have kids and one spouse in on income below 7,000 per annum.....

Could be a saving of at least €2,500 in your pocket....

What are you on about, civil partnership only applies to same sex couples...

digzy

Itchianus wrote: »

What are you on about, civil partnership only applies to same sex couples...

Are you trying to pick fights again?:rolleyes:

it's fairly obvious the poster refers to having a wedding in a registry office as opposed to the big day out in the church and hotel, with all the accompanying costs.

Itchianus

digzy wrote: »

Are you trying to pick fights again?:rolleyes:

it's fairly obvious the poster refers to having a wedding in a registry office as opposed to the big day out in the church and hotel, with all the accompanying costs.

Hardly picking a fight, and a bit rich coming from the self styled king of the put-down on the dentistry forum :rolleyes:

And it's not obvious that he's talking about anything other than the thing he specifically said, which was Civil Partnership.

mytaxreturn

Apologies - its a civil marriage I meant.

lennyloulou

Help! i really dont understand this.
I work full time and so does my husband. We married June 2011.
We never looked into being taxed as a married couple- never contacted Revenue. Both of us do the same hours approx- hubbie 2 less than me a week -As far as i know we are still classed as single people- He moved into my house in 2009.
What can I claim???? Rent? Tax relief? Mortgage is in my name still. Any advice would be appreciated

mytaxreturn

Hi
Well it all depends on your income..
If you both earn more than €16,500 but less than €32,800 then there is no difference in being taxed as a married couple..
Its all about using up your tax credits - you can swap them around to suit your income and go back 4 years to have your tax reviewed..

Kungfu

Itchianus wrote: »

What are you on about, civil partnership only applies to same sex couples...

Yeah...What you talkin' about, Willis?

This country is still under the thumb of the Catholic Church.And we all know what they got up to. So a man and woman who decide to spend their lives together are expected to comply with some biased idea of how they should live. Or be denied certain rights. But a same sex couple is free to live as they wish? If gay maarriage is to be permitted in future, then is it not fair to allow heterosexual couples to be recognised as civil partners with all of the rights that civil partnership allows? Or is it a case that fairness and equality are only to be allowed as a luxury for certain groups of people?

2ndcoming

Heterosexual couples are and have always been free to have a civil marriage i.e. one in a registry office. The only difference between a civil partnership and civil marriage is the omission of the word marriage in same sex partnerships. Religion has nothing to do with it tbh.

The reason from a tax point of view is the difficulty in linking a couple on the system as co-habiting and granting the equivalent of married credits, then breaking them up 3 months later and joining them again when they kiss and make up the following month.

In entering into a marriage or civil partnership you are bound by a contract and can only become legally separated or legally divorced.

kevmal

why can i not claim tax credits for my partner, we have lived together for 18 years, have a 16 year old daughter and a morgage, my partner suffers from Crohns disease and is unable to work, i myself work a low pay job but just get by.
I was on social welfare 4yrs ago and had much the same income from them and also had winter fuel allowence, free school bus for our daughter, school clothing allowence, and more, medical card etc, Why would anyone bother working when all this is stacked against you.

Tombo2001

kevmal wrote: »

why can i not claim tax credits for my partner, we have lived together for 18 years, have a 16 year old daughter and a morgage, my partner suffers from Crohns disease and is unable to work, i myself work a low pay job but just get by.
I was on social welfare 4yrs ago and had much the same income from them and also had winter fuel allowence, free school bus for our daughter, school clothing allowence, and more, medical card etc, Why would anyone bother working when all this is stacked against you.

Cause you are not married?

I agree on your latter point - state supports do mean that at certain salary point, particularly if you are an unmarried woman with children, you are simply better off not working......

tiredblondie

It does seem an unfair rule to be honest - when my partner had his hours cut, i was means tested and told that once he's credits were used up, my salary would come into play - but....i wasn't entitled to his tax credits as we aren't married!
Sounds like a rule to suit themselves!

relax carry on

tiredblondie wrote: »

It does seem an unfair rule to be honest - when my partner had his hours cut, i was means tested and told that once he's credits were used up, my salary would come into play - but....i wasn't entitled to his tax credits as we aren't married!
Sounds like a rule to suit themselves!

To suit who? Revenue do not make the law, only administer and enforce the system. If you wish to alter something with the taxation system, start with badgering the hell out of your local political representatives. If the system changes, Revenue will administer and enforce the changes.

tiredblondie

relax carry on wrote: »

To suit who? Revenue do not make the law, only administer and enforce the system. If you wish to alter something with the taxation system, start with badgering the hell out of your local political representatives. If the system changes, Revenue will administer and enforce the changes.

To suit whoever makes the rules that's who!

My point is, I'm not entitled to his credits if he were out of work as we're not married but I'm expected (which of course I would!) to support him as we cohabit

Peregrinus

tiredblondie wrote: »

It does seem an unfair rule to be honest - when my partner had his hours cut, i was means tested and told that once he's credits were used up, my salary would come into play - but....i wasn't entitled to his tax credits as we aren't married!
Sounds like a rule to suit themselves!

No, in this case it's a rule to suit you. If you want to be treated as married, you can marry. If you want to be treated as unmarried, you can not marry. You're in control here.

Is there some obstacle which prevents you from marrying, to secure the treatment that you want?

Mrs OBumble

tiredblondie wrote: »

To suit whoever makes the rules that's who!

My point is, I'm not entitled to his credits if he were out of work as we're not married but I'm expected (which of course I would!) to support him as we cohabit

Im in a very similar situation.

It's totally unfair.

But it is our TDs that we should be complaining to . Ir maybe some EU body.

tiredblondie

Peregrinus wrote: »

No, in this case it's a rule to suit you. If you want to be treated as married, you can marry. If you want to be treated as unmarried, you can not marry. You're in control here.

Is there some obstacle which prevents you from marrying, to secure the treatment that you want?

OK......

Peregrinus

tiredblondie wrote: »

OK......

Leaving aside whatever religious signficance you do or don't invest in the relationship (which is no business of the state's, obviously), marriage is essentially a mechanism by which a couple seeks and obtains societal recognition of their relationship. And if couples choose not to marry, the signal they are sending is that they don't want societal, official, administrative recognition of their relationship. And I don't think they can them complain that their relationship is not being recognised.

It's a different matter if a couple wishes to marry but is not free to do so, which is why the denial of same-sex marriage was an injustice. But if a couple has made a choice which results in their relationship not being recognised, I don't see why they should be complaining about that to the Revenue, or to TDs, or even to the EU. They should be asking themselves whether they have might the optimal choice, given the outcomes they want.

CIARAN_BOYLE

Peregrinus wrote: »

Leaving aside whatever religious signficance you do or don't invest in the relationship (which is no business of the state's, obviously), marriage is essentially a mechanism by which a couple seeks and obtains societal recognition of their relationship. And if couples choose not to marry, the signal they are sending is that they don't want societal, official, administrative recognition of their relationship. And I don't think they can them complain that their relationship is not being recognised.

I think the injustice they see is that social welfare recognises a relationship but revenue doesn't.


To which my response is that there's no benefit unless there's an obligation to support your partner. A couple recognised by social welfare could split up tomorrow and quickly be entitled to social welfare without counting towards each others means test. A couple recognised for tax purposes could split up tomorrow and remain access to each others tax credits as they remain reliant on each other financially.

Peregrinus

CIARAN_BOYLE wrote: »

I think the injustice they see is that social welfare recognises a relationship but revenue doesn't.


To which my response is that there's no benefit unless there's an obligation to support your partner. A couple recognised by social welfare could split up tomorrow and quickly be entitled to social welfare without counting towards each others means test. A couple recognised for tax purposes could split up tomorrow and remain access to each others tax credits as they remain reliant on each other financially.

I think this is correct. There's actually two factors at work here.

The first is the one you point to. There's a distinction between the issue of whether A is actually maintained by B (or partly maintained by and the issue of whether A is entitled to be maintained/partly maintained by B. In some contexts one of these issues is the relevant one; in other circumstances it may be other issue that is more relevant.

The second is that a couple decides whether or not to seek recognition of their relationship having regard to their own interests. But even if the couple decide not to seek recognition, the community at large (acting through the state) may decide to accord recognition anyway - not in the interests of the couple, but in the interests of the wider community.

In the social welfare context, the community obviously has an interest in not paying benefits to people who don't need them. If in fact A is supporting B fincially or materially (either by sharing income with them or by sharing other resources, such as a home) then that's obviously a relevant factor when deciding how much support B needs from the state. In that context, whether A and B are married is not that important.

But in the incomet tax context, A and B are not looking for money from the state; rather, it's the other way around. In the tax context, how A spends his or her earnings is generally irrelevant; you can't get a tax deduction or a tax benefit on the basis that you are giving some of your income to your friend B, and therefore shouldn't have to pay tax on it. You only get a tax deduction if you have a legal obligation to support B out of your income, which is of course the case if you are married to B.

If A and B are a committed conjugal couple but are unmarried, they may consider that they have a moral obligation to support one another. But, by choosing not to marry, they have chosen not to seek societal, official, administrative recognition of that obligation, and the fact that that it is disregarded for tax purposes is an outcome of that choice.

tiredblondie

CIARAN_BOYLE wrote: »

I think the injustice they see is that social welfare recognises a relationship but revenue doesn't.


To which my response is that there's no benefit unless there's an obligation to support your partner. A couple recognised by social welfare could split up tomorrow and quickly be entitled to social welfare without counting towards each others means test. A couple recognised for tax purposes could split up tomorrow and remain access to each others tax credits as they remain reliant on each other financially.

That's my point...thank you for making it clearer than I did 😊

Mrs OBumble

Peregrinus wrote: »

Il

If A and B are a committed conjugal couple but are unmarried, they may consider that they have a moral obligation to support one another. But, by choosing not to marry, they have chosen not to seek societal, official, administrative recognition of that obligation, and the fact that that it is disregarded for tax purposes is an outcome of that choice.

Its not that they MAY choose : they are forced to do so because of the unemployed one's lack of access to income support. ( its not like an unemployed person with no income can just move out easily - no landlord will accept them as a tenant!).

Many straight couples choose not to maery because they reject the patriarchial nature of marriage not because they are unwilling to commit.

CIARAN_BOYLE

Mrs OBumble wrote: »

Peregrinus wrote: »

Il

If A and B are a committed conjugal couple but are unmarried, they may consider that they have a moral obligation to support one another.  But, by choosing not to marry, they have chosen not to seek societal, official, administrative recognition of that obligation, and the fact that that it is disregarded for tax purposes is an outcome of that choice.

Its not that they MAY choose :  they are forced to do so because of the unemployed one's lack of access to income support.  ( its not like an unemployed person with no income can just move out easily - no landlord will accept them as a tenant!).

Many straight couples choose not to maery because they reject the patriarchial nature of marriage not because they are unwilling to commit.

Well unfortunately a marriage is the only relationship that obligates the couple to support each other financially.
Without an obligation you don't get any benefits from the state. If you choose to live together you are seen as choosing to support each other. While it would be difficult for one party to move out they would be able to claim full access to social welfare immediately.
Theres only one relationship that counts as a commitment and couples are refusing it because of the 'patriarchial nature of marriage'. Well I don't know what the 'patriarchial nature of marriage' is but well done on your decision.

Peregrinus

Mrs OBumble wrote: »

Its not that they MAY choose : they are forced to do so because of the unemployed one's lack of access to income support. ( its not like an unemployed person with no income can just move out easily - no landlord will accept them as a tenant!).

I’m not sure I follow you here. The very existence of choice forces us to make a choice. As Sartre points out, refusal to make a choice is itself a choice.

The cohabiting couple are free to marry or not to marry. If they don’t marry, that’s a choice to remain unmarried. The only way not to force them to a choice is to offer them no choice; to treat all cohabitants as married, regardless of whether they are or not. (Or to treat them all as unmarried, of course.)

Mrs OBumble wrote: »

Many straight couples choose not to maery because they reject the patriarchial nature of marriage not because they are unwilling to commit.

I don’t think their reasons for choosing not to marry are relevant. If their reasons are good enough for them, that’s all that matters.

But if you choose not to marry because you see the institution as patriarchal, it is hardly consistent to demand that wider society treat you as married. What could be more patriarchal and controlling than having your choice ignored, and being treated as if you had made the choice that other people who presume they know better than you do think you should have made, rather than the choice you actually made?

sandypas76

nompere wrote: »

In 2011:
The pattern here is that a one-person household has one credit of €1,650 and a multi-person household has (in effect) two credits of €1,650.

I don't see anything unfair in this..

The difference is not in the total amount of credits.
It is in the fact that a married couple can pass their credits to each other whereas two cohabiting people cannot share their individual tax credits.

When I was with my ex-husband, my weekly earnings from the job I had then were lower than my tax credits, so I passed my unused tax credits to him and so he paid less tax.
You cannot do that towards a partner you're cohabiting with.

Peregrinus

sandypas76 wrote: »

The difference is not in the total amount of credits.
It is in the fact that a married couple can pass their credits to each other whereas two cohabiting people cannot share their individual tax credits.

When I was with my ex-husband, my weekly earnings from the job I had then were lower than my tax credits, so I passed my unused tax credits to him and so he paid less tax.
You cannot do that towards a partner you're cohabiting with.

Yes, but the justification for that is that the married couple have made a formal commitment to support one another financially, and indeed are obliged to so so even one of them decides it not such a good idea after all. Their tax treatment reflects their mutual financial commitments.

The cohabiting couple have made no such commitment, so their tax treatment doesn't recognise any obligation to support one another. As a result they can't pool their income and credits in the way that a married couple can. They are taxed independently because they're finances are more independent.

Colser

Peregrinus wrote: »

Yes, but the justification for that is that the married couple have made a formal commitment to support one another financially, and indeed are obliged to so so even one of them decides it not such a good idea after all. Their tax treatment reflects their mutual financial commitments.

The cohabiting couple have made no such commitment, so their tax treatment doesn't recognise any obligation to support one another. As a result they can't pool their income and credits in the way that a married couple can. They are taxed independently because they're finances are more independent.

Yet if a cohabiting couple were to apply for any social welfare payment they are treated as a couple..so it's not a fair system at all.it's a lose lose situation if you don't sign that bit of paper.

sandypas76

Peregrinus wrote: »

Yes, but the justification for that is that the married couple have made a formal commitment to support one another financially, and indeed are obliged to so so even one of them decides it not such a good idea after all. Their tax treatment reflects their mutual financial commitments.

The cohabiting couple have made no such commitment, so their tax treatment doesn't recognise any obligation to support one another. As a result they can't pool their income and credits in the way that a married couple can. They are taxed independently because they're finances are more independent.

Hi, I'm not commenting on that. That's fine.
I was commenting on nompere's observation that the credits allocated to a married couple and to 2 single individuals living together are the same amount. I just pointed out that the total amount is the same but how you manage it is not. You are explaining the rationale behind it, thus complementing my observation, but I wasn't focusing on the rationale to be honest.

myshirt

The reality is that if you have been cohabiting long enough, you may as well be married, because you still have to support your partner post breakup.

People still forgetting this.

Peregrinus

Colser wrote: »

Yet if a cohabiting couple were to apply for any social welfare payment they are treated as a couple..so it's not a fair system at all.it's a lose lose situation if you don't sign that bit of paper.

Yes, but the social welfare system works by looking at the needs of the claimant - if you are in fact being supported by someone else, that's something they will take into account in assessing your needs. Whether that other person is obliged to support you or not is irrelevant; all that matters is that they do.

Whereas the tax system looks at the obligations of the taxpayer. If I choose to give a large chunk of my income to someone else, I don't get a tax deduction for that. It's my income; how I spend it is my affair but (mostly) I don't get a tax deduction base on my spending. (There are exceptions, obviously - mortgage interest relief, charitable donations, etc.) Married couples get favourable tax treatment not because they do support one another, but because they have accepted an obligation to do so.

Peregrinus

myshirt wrote: »

The reality is that if you have been cohabiting long enough, you may as well be married, because you still have to support your partner post breakup.

Yes, and when you reach the point of having a maintenance order made against you, you can have the maintenance deducted from your income for tax purposes (and added to you partner's income) because now you are obliged to support your ex-partner. But while you're doing so voluntarily, as a choice, without having accepted any obligation or made any commitment, that's just your personal choice about how to spend your money, and you don't get a tax deduction for it.

Screwballs

Follow up question - if a co-habiting couple do marry, can they revise the tax implications for the previous years or just from that year forward.?

ie can the claim tax credits for the previous 4 years or no?

2ndcoming

Screwballs wrote: »

Follow up question - if a co-habiting couple do marry, can they revise the tax implications for the previous years or just from that year forward.?

ie can the claim tax credits for the previous 4 years or no?

No, they are only treated as married from their date of marriage on.

amtc

2ndcoming wrote: »

Screwballs wrote: »

Follow up question - if a co-habiting couple do marry, can they revise the tax implications for the previous years or just from that year forward.?

ie can the claim tax credits for the previous 4 years or no?

No, they are only treated as married from their date of marriage on.

That's like saying can I get tax credits for the man I haven't yet met!

corklad32

Hi guys

I'll give a quick overview of my situation. I have rung a number of solicitors and none of them are specialists in the area as far as i can see.

I'm living with my partner for the last 10 years in an apartment. I pay the mortgage on the apartment and the apartment is solely in my name.
I have a life insurance policy and small amount of savings. I want to make a will but i don't want my partner who i will leave everything to to be liable for tax. Is there any way apart from marriage to avoid this scenario?

I understand i can make a will and leave everything but in the current setup tax will need to be paid on the savings, apartment and life insurance. Surely there must be some other option? OR if anyone knew a solicitor that specialises in such matters in the Cork area would be great

Thanks

CIARAN_BOYLE

no other way.

Peregrinus

This is what marriage is for, basically.

If there are reasons why you cannot marry, then a solicitor/tax adviser may be able to help you and your partner devise and implement strategies which minimise, or at least reduce, the tax hit is your partner surivives you. But it's very unlikely that they will be anything like as effective as actually marrying, if you are in a position to do that.

Squatter

corklad32 wrote: »

Surely there must be some other option?

Of course there is! You just need to think outside the box; how about legally adopting your partner and then writing a will that leaves your worldly goods to him/her as your sprog!

(Mind you, in that situation you'd need to ensure that you're not risking a prosecution for incest; it might be advisable to ask a solicitor for advice about that!)


Let us know how you get on!