Best way to divide tax credits for married couple

StarBright01

Looking for some advice here please re tax for a married couple. Sorry if this has already been asked here previously

I'm in the lower tax band and my husband is in the higher tax band. I earn €26000 (working a four day week) and my husband earns €47000. Is there a good way to divide tax credits or is half and half the best way? Just noticed on submitting my form 12 & p21 balancing statement that revenue currently have them halved.

Any advice much appreciated? Haven't a clue how it works

namenotavailablE

For tax credits, an equal split is fine at those income levels.

For standard rate band, you should have €26000 and your husband should have €43100 for 2018 to ensure that all of your earnings are taxed at 20%. In 2017, the split would have been €26000 and €41600 (the last Budget increased the amount for 2018).

Feel free to check my spreadsheet linked in my signature below.

StarBright01

namenotavailabl wrote: »

For tax credits, an equal split is fine at those income levels.

For standard rate band, you should have €26000 and your husband should have €43100 for 2018 to ensure that all of your earnings are taxed at 20%. In 2017, the split would have been €26000 and €41600 (the last Budget increased the amount for 2018).

Feel free to check my spreadsheet linked in my signature below.

Perfect thanks for that!

budgemook

Hi, at what point does it make sense to transfer credits to the husband? If he was making 80k or so would it make sense to transfer some credits?

relax carry on

budgemook wrote: »

Hi, at what point does it make sense to transfer credits to the husband? If he was making 80k or so would it make sense to transfer some credits?

There's 2 parts to the tax system, credits and rate band. If one of you is earning under 16500 a year then an unused portion of credits can be transferred otherwise they are already being used.
The second part of the tax system is rate band. If one of you is earning under €34,500 for the year then up to 9000 euro of your unused rate band can be transferred to the higher earner reducing the tax they pay.

All of this assumes you are jointly assessed.

namenotavailablE

Transferring credits from one spouse to another is really only relevant if the transferring spouse is on a low income.

Every employee will typically receive credits of €3300, consisting of the 'Personal credit' of €1650 and the 'Employee credit' of the same amount. These are used to reduce tax, so they save all tax on income up to €16500 (i.e. €3300/20%). You can transfer the 'Personal credit' so if your income was say €12,000 pa, you could consider transferring €4500 [i.e. 16500-12000] *20% = €900 of your personal credit to your spouse, as you wouldn't need it and s/he would be able to use it.

EDIT: Relax Carry On beat me to it
EDIT 2: I've a spreadsheet at taxcalc.eu/monthlyss which provides a suggested split of standard rate band for a dual income couple (it's called Allocating SRCOP between spouses)

budgemook

Thanks for these replies. Sounds like I should leave my credits alone and make sure we have the tax band rates allocated as best we can.

Honestly, I've been looking into this for a while and it all seems so convoluted on revenue.ie but it's some simple when put like this!

namenotavailabl -FYI, your spreadsheet doesn't seem to work on Excel on Mac. I'll give it a go in work tomorrow.

Thanks

namenotavailablE

budgemook wrote: »

namenotavailabl -FYI, your spreadsheet doesn't seem to work on Excel on Mac.

Yep- unfortunately it's outside of my control, as it's due to a Microsoft decision a few years back to discontinue supporting VBA (the programming code used to create macros) for the Mac platform.

budgemook

namenotavailabl wrote: »

Yep- unfortunately it's outside of my control, as it's due to a Microsoft decision a few years back to discontinue supporting VBA (the programming code used to create macros) for the Mac platform.

yeah I've come across this problem multiple times.

Thanks for the link anyway, it will come in useful.

del158

Hi,

Looking for advise on the same subject also on how we should split our earning, spouse 1 earns 33,000 and spouse 2 earns 52000.

Thanks in advance