Please help me understand!

VandC

I'm asking your goodselves for help. I just cannot wrap my head around how tax credits work when married. I've looked at examples online on revenue and my head is melted (dunno why I just can't "get" this).

The bit I don't "get" is what way it would benefit us if I was to give up work. Can someone please explain to me and if it's true that it'd be better if I even worked ten hours a week? If possible can you please show me the calculations?

As far as I can make out it's not worth a joint assessment now but trying to work out what take home he would have if I could transfer my credits to him if I was to give up work or even work part time. I don't think we would be entitled to anything else.

Appreciate any clarity on this, I'm actually embarrassed that I have to ask this!!

toadfly

Im a little confused by your question - you wont be better off if you dont work.

Transferring your cut off to your spouse (the amount you can earn at the lower rate ie 20%) is only worthwhile if one of you earn less than 33800 and one earns more.

Transferred your credits is only useful if one of you earns less than 16500 (the standard tax free rate).

If you give us a rough idea of what you both earn, we can help you split them.

Do you have kids?

VandC

Sorry, I suppose "better off" is not the best way to describe it. I know we would have less money but what I am trying to figure out is the kind of lifestyle we would have if I gave up work. Someone had said to me that to maximise what you could do with your tax would be for me to work some hours, and that it wouldn't really matter how little it was, I just had to earn something.

I don't want to go in to exact salaries, and I think the "odd" numbers on the revenue site is what's throwing me (or maybe it's the kids constantly interrupting )

So, just for me to get an example so i can get my head around all this, let's say he's on 60k and I'm on 40k and there are 2 kids. No benefit to joint assessment now, as we are both in the higher tax bracket. Say I give up work (as the lesser earner) what would his take home pay be if I transferred all that I could (I'm only entitled to the standard tax credits, I don't have anything else to transfer)? How is it calculated?

Do I need to work (as I mentioned someone told me I'd have to work to get the best scenario)? I know if I did having given him all credits it would be taxed at the highest levels.

Thanks

CIARAN_BOYLE

VandC wrote: »

Sorry, I suppose "better off" is not the best way to describe it. I know we would have less money but what I am trying to figure out is the kind of lifestyle we would have if I gave up work. Someone had said to me that to maximise what you could do with your tax would be for me to work some hours, and that it wouldn't really matter how little it was, I just had to earn something.

I don't want to go in to exact salaries, and I think the "odd" numbers on the revenue site is what's throwing me (or maybe it's the kids constantly interrupting )

So, just for me to get an example so i can get my head around all this, let's say he's on 60k and I'm on 40k and there are 2 kids. No benefit to joint assessment now, as we are both in the higher tax bracket. Say I give up work (as the lesser earner) what would his take home pay be if I transferred all that I could (I'm only entitled to the standard tax credits, I don't have anything else to transfer)? How is it calculated?

Do I need to work (as I mentioned someone told me I'd have to work to get the best scenario)? I know if I did having given him all credits it would be taxed at the highest levels.

Thanks

There's 24800 of non transferable 20% band. So if you earn upto 24800 you won't be taxed at the higher rate.

If you transfered every thing you caneed his take home would go up by 1650 tax credits and 9000×20% cut off point.

VandC

CIARAN_BOYLE wrote:

There's 24800 of non transferable 20% band. So if you earn upto 24800 you won't be taxed at the higher rate.

CIARAN_BOYLE wrote:

If you transfered every thing you caneed his take home would go up by 1650 tax credits and 9000Ã႒—20% cut off point.

OK, just make sure I have this right:

His tax credits will change as follows:
Existing credits remain in place plus 1650.

Taxable @ 20% will be 33800 (or whatever the rate is now) +9000=42800, and anything earned above this will be at higher tax rate?

I can earn 24800 tax free? (Cha ching lol )

draiochtanois

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CIARAN_BOYLE

VandC wrote: »

OK, just make sure I have this right:

His tax credits will change as follows:
Existing credits remain in place plus 1650.

Taxable @ 20% will be 33800 (or whatever the rate is now) +9000=42800, and anything earned above this will be at higher tax rate?

I can earn 24800 tax free? (Cha ching lol )

No the 24800 is a non transferable standard rate band so can earn 24800 without being taxed at 40%. You will still be taxed at 20%

I know a few people that have taken a period where they work the minimum to use up their standard rate band.

VandC

draiochtanois wrote:

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Cool, thanks for that, I'll play around with that

CIARAN_BOYLE wrote:

No the 24800 is a non transferable standard rate band so can earn 24800 without being taxed at 40%. You will still be taxed at 20%

Aw, thought is hit jackpot there. Obv getting carried away with myself




Thanks all for your help, think I finally "get it"

Skittlebrau

Assuming you have kids, there's also an additional tax credit of up to €1,100 available.

http://www.revenue.ie/en/tax/it/credits/home-carers.html

draiochtanois

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