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How best to use Tax Free Allowances

  • 23-05-2016 01:34PM
    #1
    Registered Users, Registered Users 2 Posts: 2


    Hi All

    I am hoping someone can give me a bit of a steer regarding how best to use Tax Free Allowances. I know we should probably go to an accountant about this, but things are a bit tight and we just can't afford to do this right now.

    Bit of background....

    I work full time and have both my TFA and also my husbands. I earn c.€53k per annum

    Husband is not employed at present, but has income from a rental property of €12k per annum. (This figure is before any costs are netted off). So each Oct/Nov we are faced with a tax bill for this income, which we really struggle to deal with.

    So would we be better off giving my husband back his TFA and allowing him to use this against the rental income?

    Or is it a case that the overall tax amount would be the same each year, and splitting the TFAs would simply restructure how we pay the tax?

    Basically is there anyway we could use the TFAs to ensure we are better off??

    Any advice on this would be gratefully received

    TIA


Comments

  • Registered Users, Registered Users 2 Posts: 14,595 ✭✭✭✭CIARAN_BOYLE


    Hi All

    I am hoping someone can give me a bit of a steer regarding how best to use Tax Free Allowances. I know we should probably go to an accountant about this, but things are a bit tight and we just can't afford to do this right now.

    Bit of background....

    I work full time and have both my TFA and also my husbands. I earn c.€53k per annum

    Husband is not employed at present, but has income from a rental property of €12k per annum. (This figure is before any costs are netted off). So each Oct/Nov we are faced with a tax bill for this income, which we really struggle to deal with.

    So would we be better off giving my husband back his TFA and allowing him to use this against the rental income?

    Or is it a case that the overall tax amount would be the same each year, and splitting the TFAs would simply restructure how we pay the tax?

    Basically is there anyway we could use the TFAs to ensure we are better off??

    Any advice on this would be gratefully received

    TIA

    As long as you are using all your SRCOP and TC theres nothing you can do to be better off. Any reallocation would only make your take home pay less and your eventual tax bill less by the same amount.


  • Registered Users, Registered Users 2 Posts: 10,301 ✭✭✭✭gerrybbadd


    Hi All

    I am hoping someone can give me a bit of a steer regarding how best to use Tax Free Allowances. I know we should probably go to an accountant about this, but things are a bit tight and we just can't afford to do this right now.

    Bit of background....

    I work full time and have both my TFA and also my husbands. I earn c.€53k per annum

    Husband is not employed at present, but has income from a rental property of €12k per annum. (This figure is before any costs are netted off). So each Oct/Nov we are faced with a tax bill for this income, which we really struggle to deal with.

    So would we be better off giving my husband back his TFA and allowing him to use this against the rental income?

    Or is it a case that the overall tax amount would be the same each year, and splitting the TFAs would simply restructure how we pay the tax?

    Basically is there anyway we could use the TFAs to ensure we are better off??

    Any advice on this would be gratefully received

    TIA

    Tax free allowances haven't been available since 2002 :p

    It'll make no difference what ye do here really. He is not due a PAYE tax credit against his rental income. If you were to reallocate his personal tax credit to him, he will save 1650 on his tax bill. But you will pay 1650 in yours. So it's robbing Peter to pay Paul.


  • Registered Users, Registered Users 2 Posts: 2 Abitconfused


    A big thank you to both of you. I think I probably knew already that there would be no magical way for us to be better off and that Revenue will always get you somehow! But at least I know for sure now :-)

    Regarding TFAs, I am very much behind the times, but didn't realise I was at least a decade behind! :-D

    Thanks again


  • Registered Users, Registered Users 2 Posts: 1,312 ✭✭✭scheister


    A big thank you to both of you. I think I probably knew already that there would be no magical way for us to be better off and that Revenue will always get you somehow! But at least I know for sure now :-)

    Regarding TFAs, I am very much behind the times, but didn't realise I was at least a decade behind! :-D

    Thanks again

    While their is no magic formula to lower the tax owed as a whole. if you give the personal credit back to your husband it will lower the lump sum you need to find at filing time. It will reduce your take home pay by same amount. It means finding €1650 less each October but your take home pay will be reduced by roughly €30 per week. Which may be more manageable.


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