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Splitting Tax Credits

  • 09-12-2014 10:00am
    #1
    iba
    Registered Users, Registered Users 2 Posts: 2,637 ✭✭✭


    Hi,

    I would be grateful for advice on what is the best way to allocate my tax credits and the tax credits of my wife.

    My situation is that I am employed and earn approx. 45k p.a. through the PAYE system.

    My wife's situation is that she left her job last Friday and from now on, for approx the next three years, her income will be rent received of approx. €1,100 p.c.m from a property she is renting out.

    So what is the best way to allocate our credits to maximize our take home pay/income and pay as little tax as possible?

    Thank you.
    Tagged:


Comments

  • #2
    iba
    Registered Users, Registered Users 2 Posts: 2,637 ✭✭✭iba


    Bumpty bump


  • #3
    srsly78
    Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    Joint assessment or not? There is probably no efficiency to be had.


  • #4
    Skiff!
    Registered Users, Registered Users 2 Posts: 6 ✭Skiff!


    Your wife will need her personal tax credit of 1650 against her rental income. So there is no point moving credits. You can take her unused rate band however. Which for 2015 would give you a cut-off point of 42,800 and your wife 24,800.


  • #5
    iba
    Registered Users, Registered Users 2 Posts: 2,637 ✭✭✭iba


    Skiff! wrote: »
    Your wife will need her personal tax credit of 1650 against her rental income. So there is no point moving credits. You can take her unused rate band however. Which for 2015 would give you a cut-off point of 42,800 and your wife 24,800.


    Thanks for that info. Skiff, much appreciated.

    Since her monthly income is €1,100 can I decrease her tax credit to that amount and add the €550 difference to mine?

    Cheers


  • #6
    Skiff!
    Registered Users, Registered Users 2 Posts: 6 ✭Skiff!


    It really depends on her net rental income after expenses and capital allowances. If her annual rental income after both of those is greater than 8,250 then she will be using up all transferable credits against her rental income. Therefore there is no benefit transferring it to you.

    She will not be allowed to use her PAYE credit of 1650 against this income as it can only used against employment income. Nor can she transfer her PAYE credit to you.

    So basically she will only be allowed her personal credit of 1650 against her rental income. She will lose her 2nd PAYE credit of 1650 as she has no PAYE income and it is non-transferable.


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  • #7
    Skiff!
    Registered Users, Registered Users 2 Posts: 6 ✭Skiff!


    It really depends on her net rental income after expenses and capital allowances. If her annual rental income after both of those is greater than 8,250 then she will be using up all transferable credits against her rental income. Therefore there is no benefit transferring it to you.

    She will not be allowed to use her PAYE credit of 1650 against this income as it can only used against employment income. Nor can she transfer her PAYE credit to you.

    So basically she will only be allowed her personal credit of 1650 against her rental income. She will lose her PAYE credit of 1650 as she has no PAYE income and it is non-transferable.


  • #8
    iba
    Registered Users, Registered Users 2 Posts: 2,637 ✭✭✭iba


    Skiff! wrote: »
    It really depends on her net rental income after expenses and capital allowances. If her annual rental income after both of those is greater than 8,250 then she will be using up all transferable credits against her rental income. Therefore there is no benefit transferring it to you.

    She will not be allowed to use her PAYE credit of 1650 against this income as it can only used against employment income. Nor can she transfer her PAYE credit to you.

    So basically she will only be allowed her personal credit of 1650 against her rental income. She will lose her PAYE credit of 1650 as she has no PAYE income and it is non-transferable.

    Thank you very very much for your detailed reply.

    Regards


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