Consequences of being jointly assessed?

Famous Blue Raincoat

I've a serious issue I need to sort out so I have to get the finances correct and I just don't know where in society I/we could go to be correctly informed so hopefully somebody here can assist.

Our little child is very unwell and we cannot get a childminder to look after him - people have been very nice about declining, but declining nonetheless. We are now at the stage - barring a miracle - where my wife will be giving up work to care for him fulltime. This, for us, is financially a drastic move so we're trying to maximise our net income.

1. Her income is €70k (from one private sector income), and mine is €62k (from two incomes; €55k public sector & €7k private sector). We have two very young children in total, both of whom have been in fulltime childcare, and a substantial mortgage. In short, between both these two outgoings alone we're paying very slightly under €5k per month. And while it might financially make sense for me to give up my job, she would not be able to focus on work with worry about him so she is determined that if anybody gives up work it will be she. Exacerbating the finances, a voluntary severance package will be offered by her firm in the first half of next year and as she is there a long time she would be entitled to a considerable amount (including a tax free lump sum) if she could last in work that long. In short, financially the timing of this is woeful. 'We are where we are', however.

2. We were married in 2012, but never bothered changing our tax status from individual to jointly assessed. Given the above finances, would there be any advantage in our doing so now? That's my first question. Also, if we changed now, when would any benefits from it take effect immediately; if not, how long would we have to wait?
I rang Revenue and the man on the line said it's always advantageous to be jointly assessed, but I distinctly recall people saying before this is not necessarily the case, and I recall McCreevy changing tax law in 2001 to penalise families which had one income ("incentivise both parents to work outside the home"). What is best for our situation? (My €55k income above is from being a public servant so I'm paying an extra 10% tax in the form of the PRD on all income above 32k or something similar)

3. For the past month we've been paying for his crèche place but he has not returned. The crèche has been absolutely fantastic. Really professional. But with bugs and so forth coming into winter our paediatrician consultant and gp strongly advised not to return him. Accordingly we have both given up work days and depended on the goodwill of a very kind relative. The relative cannot look after him fulltime from 2 weeks time so we need to get our ducks in a row now. This is the alternative choice: my wife could drop down to four days work, and work from home on one of those four days with a family member essentially looking after the child around the house. Therefore we would need a childminder - a miracle - for three days per week. Financially, that would be much smarter than giving up work totally. I suppose on this point, we're also wondering is there any state help for people in our situation (We've both been in fulltime taxable employment since we left college c. 20 years ago if that makes a difference) that would mitigate the financial consequences of either leaving work entirely, or my wife going down to a four-day week.

All help and insight will be greatly appreciated.

relax carry on

As it stands at the moment there's no benefit to you being jointly assessed as it will work out exactly the same tax wise. The benefit will kick in when your spouse has very little or no taxable income coming in.

When you are set up as jointly assessed, you will be able to avail of 9000 euro of your spouse's unused rate band, her 1650 personal tax credit and a home carers tax credit of 1100. For you that equals €4550 less tax you'll pay each year. The above assumes no taxable income from your spouse during the tax year.

I don't believe there's any other state assistance available to you in your circumstances as most of them would be means tested and you'd probably be above the means test income level on your income alone. You may wish to open a thread in the welfare section for may possible state assistance payments for your circumstances.

Mrs OBumble

Have you tried asking your doctor or disability support organisation if they know of any childcarers who do "specialist" children?

Or maybe hire a nurse rather than a childcare person for the three days?

Turnipman

OP, are you and your missus aware of the info. at this link:-

http://www.citizensinformation.ie/en/employment/employment_rights_and_conditions/leave_and_holidays/carers_leave_from_employment.html

Specifically, Carer's Benefit and Carer's Allowance (bear in mind that even if your missus doesn't get a Carer's Allowance payment, she may get PRSI credits so it's worth applying.)

Watergirl4

How much are you paying in childcare at the moment per month.

Using taxcalc.ie and assuming no pension contributions for your wife, it looks like her net pay is around €46,798 pa
Your net pay would increase by €4,550 if she wasnt working based on above
If childcare is €2k per month, that would be €24,000 pa you would save
If your wife qualified for carers benefit at €200 pw = €10,400 additional income (not sure of impact on homecarer tax credit)

That would mean that annually you would be approx €8k (-46798+4550+24000+10400)worse off without taking her costs of going to work into account - all based on childcare cost assumption above.

Is it possible for you to take unpaid parental leave until her redundancy happens - you have 26 weeks per child that you can use, or even a few days per week and she works from home for a few days. She could also take parental leave and as still an employee might be eligible for the severance payment?

BorneTobyWilde

I don't see a couple taking in 132k a year getting any benefits. Bit cheeky to even expect them.

Watergirl4

I don't think that your wife will qualify for carer's allowance (means tested) but carer's benefit is based on PRSI contributions (like maternity benefit).

Watergirl4

BorneTobyWilde wrote: »

I don't see a couple taking in 132k a year getting any benefits. Bit cheeky to even expect them.

carer's benefit is not means tested but would not be paid if the carer was earning over a certain amount/working more than a restricted number of hours per week.

so the 132k gross would become 62k