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Sorry, asking again, credits & allowances split

  • 24-01-2012 11:58pm
    #1
    naughtysmurf
    Registered Users, Registered Users 2 Posts: 3,293 ✭✭✭


    Sorry did ask this a few weeks back but have more up to date info which may affect things

    Married couple, tax asessed as married couple as far as I know, paye

    A few years back one of them was put on a three day week and it looked liked redundancy was on the cards so moved all possible allowances & credits to spouse

    Redundancy didn't happen and went back to working normal hours but left maximum credits & allowances with spouse

    Situation change : For 2012 the credits & allowances have been split equally

    Person 1 earns 72k p/a
    Person 2 earns 28k p/a

    It was the lower earner whose job was under threat a few years back and originally transferred the credits & allowances

    Q Would it be possible for their joint monthly take home income to be reduced by in excess of €500 per month compared to 2011 because of the new split?

    The lower earners monthly take home has increased by about €160/month compared to 2011 because of the change

    Thanks


Comments

  • #2
    mari2222
    Registered Users, Registered Users 2 Posts: 568 ✭✭✭mari2222


    It doesnt matter how the split is done during the year - it will all result in an over or under payment at year end - ask revenue for a balancing statement for the year end and take it from there.

    (Assumes you are on joint assessment)


  • #3
    relax carry on
    Registered Users, Registered Users 2 Posts: 4,113 ✭✭✭relax carry on


    naughtysmurf wrote: »
    Sorry did ask this a few weeks back but have more up to date info which may affect things

    Married couple, tax asessed as married couple as far as I know, paye

    A few years back one of them was put on a three day week and it looked liked redundancy was on the cards so moved all possible allowances & credits to spouse

    Redundancy didn't happen and went back to working normal hours but left maximum credits & allowances with spouse

    Situation change : For 2012 the credits & allowances have been split equally

    Person 1 earns 72k p/a
    Person 2 earns 28k p/a

    It was the lower earner whose job was under threat a few years back and originally transferred the credits & allowances

    Q Would it be possible for their joint monthly take home income to be reduced by in excess of €500 per month compared to 2011 because of the new split?

    The lower earners monthly take home has increased by about €160/month compared to 2011 because of the change

    Thanks

    You have split the credits and rate band 50/ 50 for the year. Assuming you just have the standard personal and PAYE credits of 3300 Euro each, you both will use up your credits covering 16500 euro without paying tax (3300 x 5).
    That leaves your standard rate band of 32800 each. As one of you is only earning 28000, that leaves you with 4800 euro of rate band to transfer to the higher earner. That means that the higher earner can pay an extra 4800 euro at 20% rather than 41%. You can have this apply through the year so the higher earner pays less each month or leave everything 50/50 for year and do a review online at the end if the year to get that 4800 taken into account, which should lead to a refund.
    The above only refers to PAYE.

    http://www.revenue.ie/en/tax/it/leaflets/it1.html

    http://www.revenue.ie/en/personal/faqs/how-do-i-work-out-my-tax.html

    http://www.revenue.ie/en/personal/tax-refunds.html


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