Tax credits if wife stops working

jamesd2013

Hi all

My wife and i are looking to have another kid but i don't know if we can afford it. If she stops working do i get all her tax credits and pretty much pay no tax?

I make 48 k and pay out about 900 in tax and pension.She makes 16k and pays about 200 a month in tax.Essentially nothing on a weekly rate

Obviously there are loans and credit cards to pay out for but if i end up getting her credits and does that mean i basically work tax free or does it work like that?

Also are you entitled to any other benefits after child number 2 .

Thanks all

denis160

You don't get all her tax credits, what you are entitled to if you are assessed as a married couple are:

You will be entitled to a SRCOP of €41800 @ 20%, anything over this you pay @ 41%

Married Couple tax credit is €3300
+ Home carer of €810 (if your wife is not working & staying at home to mind kids)
+ PAYE tax credit of €1650
= total tax credit of €5760

d.

jamesd2013

I don't really get the tax credit thing. What period is that total tax credit for exactly? Don't really know ho wit breaks down into taxing wages.

namenotavailablE

Tax credits are granted for the year- you get the full credit even if you're only working for a portion of the year. The annual amount is spread over the calendar year for the purpose of calculating your net pay.

In the above scenario outlined by denis160, you receive €480 per month [€5760/12]. So, if you only started to work on 1 July, your total tax credits used to compute your pay in July would be €480 x 7 months= €3360. Your gross tax due would be calculated on your total calendar year earnings (i.e. only the July pay in this example if you weren't working prior to July) @ 20%/41% and the difference between the gross tax and the €3360 accumulated tax credits is the net tax you'd pay in July. In this scenario, you'd pay Nil net tax in July (unless you were earning megabucks), because your gross tax for July would presumably be less than €3360. Over the next few pay periods, you'd use up your tax credits and eventually start paying tax.