tax after marriage

Blanco100

I recently got married, my wife earns 28k and I earn 42k (gross figures).

just wondering what I need to do, should I contact revenue to notify them of this? is it best to be jointly assessed?

I will also be looking to avail of a tax saver ticket for my commute, I know the discount is different depending on your tax bracket, am I able to avail of the 40% (higher rate) discount under any circumstances?

any advice would be greatly appreciated

seamus

You can only avail of the tax relief at the higher bracket if you pay tax at the higher rate.

Joint assessment is better in your case because your wife doesn't breach the top tax bracket. Jointly assessed you reduce your tax paid at the top rate to €360 (down from €2000-something) and your take home increases by €110/month.

When you get married, you simply notify Revenue of your change in circumstances. Revenue will give you a one-off tax credit in the year you get married. Joint Assessment will only apply from the next year (iirc)

Blanco100

seamus wrote: »

You can only avail of the tax relief at the higher bracket if you pay tax at the higher rate.

Joint assessment is better in your case because your wife doesn't breach the top tax bracket. Jointly assessed you reduce your tax paid at the top rate to €360 (down from €2000-something) and your take home increases by €110/month.

When you get married, you simply notify Revenue of your change in circumstances. Revenue will give you a one-off tax credit in the year you get married. Joint Assessment will only apply from the next year (iirc)

thanks for the reply. In relation to tax saver ticket, will I be paying tax at the higher rate and therefore be eligible for the tax relief at the higher bracket?

seamus

Blanco100 wrote: »

thanks for the reply. In relation to tax saver ticket, will I be paying tax at the higher rate and therefore be eligible for the tax relief at the higher bracket?

You can only get relief on tax that's due.

Based on quick calculations, jointly assessed you will pay €360 in tax at the higher rate. So the the tax relief on your ticket will be €360 at the higher rate and the balance at the lower rate.

For example, if you get an annual commuter rail ticket, that's €1800. 40% of that is €720, which is more than €360. So you'll save €360 at the higher rate, and 20% on the balance (€180). These figures are illustrative (or probably entirely wrong) because you have to factor in USC too.

An easier way to look at this, rather than try to work out savings at the higher rate, is to say that your commuter ticket reduces the amount of money you earn, and in return you get free travel. In your case, it reduces your earnings so that all tax paid is now in the lower bracket.

You won't "save more" by being separately assessed and staying in the higher tax bracket.

Blanco100

seamus wrote: »

You can only get relief on tax that's due.

Based on quick calculations, jointly assessed you will pay €360 in tax at the higher rate. So the the tax relief on your ticket will be €360 at the higher rate and the balance at the lower rate.

For example, if you get an annual commuter rail ticket, that's €1800. 40% of that is €720, which is more than €360. So you'll save €360 at the higher rate, and 20% on the balance (€180). These figures are illustrative (or probably entirely wrong) because you have to factor in USC too.

An easier way to look at this, rather than try to work out savings at the higher rate, is to say that your commuter ticket reduces the amount of money you earn, and in return you get free travel. In your case, it reduces your earnings so that all tax paid is now in the lower bracket.

You won't "save more" by being separately assessed and staying in the higher tax bracket.

say my monthly ticket costs 550euro per month if bought straight up, what would the same ticket under tax saver scheme cost provided I was jointly assessed?
would it be better off being assessed on my own in order to receive a better discount?
apologies for the stupid questions, im just looking at what the best option would be for me and the family.

and yes you read that correct, my monthly ticket costs 550 per month.

seamus

Blanco100 wrote: »

and yes you read that correct, my monthly ticket costs 550 per month.

Bloody hell.

Right, using the Deloitte calculator, your income is 35,340 after the tickets are deducted.

Jointly assessed (28k + 35k) your monthly take home is €4,430.00

Separately assessed, your monthly take home is €2,420 + €1,997 = €4,417.

So there's a marginal gain in joint assessment, but only because your monthly ticket is so expensive. If you can reduce your commuting costs (or increase your salary), the gain for joint assessment is greater.

Blanco100

seamus wrote: »

Bloody hell.

Right, using the Deloitte calculator, your income is 35,340 after the tickets are deducted.

Jointly assessed (28k + 35k) your monthly take home is €4,430.00

Separately assessed, your monthly take home is €2,420 + €1,997 = €4,417.

So there's a marginal gain in joint assessment, but only because your monthly ticket is so expensive. If you can reduce your commuting costs (or increase your salary), the gain for joint assessment is greater.

if i was separately assessed and paid 40% tax on anything over 35k (remaining 7k) would I not save more on the tax saver ticket?

Blanco100

Blanco100 wrote: »

if i was separately assessed and paid 40% tax on anything over 35k (remaining 7k) would I not save more on the tax saver ticket?

just bumping this again, apologies if its a stupid question

namenotavailablE

If you are jointly assessed and assuming that you and your wife allocate standard rate band optimally (using the values given, the bands allocated would be the match of your respective incomes), the net pay each would be as follows in 2019 (I'm deducting the astonishingly high €550 monthly travel saver cost from your pay- this reduces your gross from €42000 to €35400, so you wouldn't save more on the tax saver ticket whether joint or separately assessed):



The big advantage of being 'jointly assessed' is that you can optimally share standard rate band and get the tax benefits during the year. If you go for 'separate assessment', you'll be treated as two single individuals and have to wait until the end of the year to get any tax back, so there's a delay in getting the refund which might arise. Of course, the prospect of getting a 'New Year's gift/ refund' from the tax office might appeal

One other thing: if you qualify for a FULL medical card, you'd both qualify for low rate USC, saving a combined €600 pa. You may already be aware of this/ availing of it but worth mentioning.

Blanco100

namenotavailabl wrote: »

If you are jointly assessed and assuming that you and your wife allocate standard rate band optimally (using the values given, the bands allocated would be the match of your respective incomes), the net pay each would be as follows in 2019 (I'm deducting the astonishingly high €550 monthly travel saver cost from your pay- this reduces your gross from €42000 to €35400, so you wouldn't save more on the tax saver ticket whether joint or separately assessed):



The big advantage of being 'jointly assessed' is that you can optimally share standard rate band and get the tax benefits during the year. If you go for 'separate assessment', you'll be treated as two single individuals and have to wait until the end of the year to get any tax back, so there's a delay in getting the refund which might arise. Of course, the prospect of getting a 'New Year's gift/ refund' from the tax office might appeal

One other thing: if you qualify for a FULL medical card, you'd both qualify for low rate USC, saving a combined €600 pa. You may already be aware of this/ availing of it but worth mentioning.

€550 isnt the cost of travel saver(minus deduction) its the cost before there is any deduction (20% or 40% depending on rate of tax paid).

how much of a deduction would i get on this travel saver ticket based on earning 42k?

namenotavailablE

The way travel saver works is that your employer buys it and takes the cost off your salary- you're then taxed on the remainder. So, if your gross is €42000 and the travel saver is €6600, you'd be taxed on €35400.

The tax on that amount in 2019 for a single person would be (20%x35300)+(40%x100)=7100. From that, you deduct tax credits of 3300 leaving an overall PAYE liability of €3800. PRSI and USC are an additional €2332.
If you are married and are able to take some standard rate band from a lower earning spouse, you'd pay 20% on all earnings, so there's a small saving- just €20. There's no change in overall PRSI or USC.

Blanco100

looking to notify Revenue of my wish to be jointly assesed. It was my understanding I just had to call them and ask to be jointly assessed. They have however asked me to fill out the Assessable Spouse Election Form.

I am unsure of which option to take. I was actually hoping to even be jointly assessed for the next paycheck but Im guessing it may be too late for 2018 and may only be applied in 2019?

I earn 42k and my spouse 28k.

There are 3 options on the form and im unclear as to which I need to complete (I would basically like to pay less tax at 40% of my balance over 35000).

Do I simply choose option A on the assessable spouse election form (electing myself to be assessable spouse for 2018)?

or do i need to do anything else?

Stratvs

Blanco100 wrote: »

looking to notify Revenue of my wish to be jointly assesed. It was my understanding I just had to call them and ask to be jointly assessed. They have however asked me to fill out the Assessable Spouse Election Form.

I am unsure of which option to take. I was actually hoping to even be jointly assessed for the next paycheck but Im guessing it may be too late for 2018 and may only be applied in 2019?

I earn 42k and my spouse 28k.

There are 3 options on the form and im unclear as to which I need to complete (I would basically like to pay less tax at 40% of my balance over 35000).

Do I simply choose option A on the assessable spouse election form (electing myself to be assessable spouse for 2018)?

or do i need to do anything else?

Either of you can elect to be the assessable spouse, that's up to you. Some people go with the higher earner but it's a matter of choice.

If you want to adjust the split of cut-off For 2019 its €44,300 + €26,300 = €70,600 max at the lower rate between you.

So at 42K and 28K I'd be leaving tax credits as they are each with their own share, and I'd be splitting cut-off point €28,000 to spouse and the rest to you €42,600 . You can put in estimated pay at part (a) and Revenue should adjust to the best usage or you can specify exactly how you want to split it in part (b) if you prefer.

If you were married in 2018 then 2019 will be the first year they will split it under joint assessment. But yo may request a review of 2018 after the year end and for the period post-marriage if you would have benefited from the application of joint assessment then they will revise it.

Blanco100

Stratvs wrote: »

Either of you can elect to be the assessable spouse, that's up to you. Some people go with the higher earner but it's a matter of choice.

If you want to adjust the split of cut-off For 2019 its €44,300 + €26,300 = €70,600 max at the lower rate between you.

So at 42K and 28K I'd be leaving tax credits as they are each with their own share, and I'd be splitting cut-off point €28,000 to spouse and the rest to you €42,600 . You can put in estimated pay at part (a) and Revenue should adjust to the best usage or you can specify exactly how you want to split it in part (b) if you prefer.

If you were married in 2018 then 2019 will be the first year they will split it under joint assessment. But yo may request a review of 2018 after the year end and for the period post-marriage if you would have benefited from the application of joint assessment then they will revise it.

Thanks very much for the info. the form is confusing however.

Is it sufficient just to fill in both our salaries for 2019 and declare myself accessable spouse?

Stratvs

Blanco100 wrote: »

Thanks very much for the info. the form is confusing however.

Is it sufficient just to fill in both our salaries for 2019 and declare myself accessable spouse?

Yes, if you just fill in your salaries Revenue should allocate cut off in the best manner. However you need to check that when you get your Revenue Payroll Notification details for 2019 ( formerly Tax Credit Cert ). If you're happy to go as assessable spouse then that's fine also.

It would also be important to be registered for Revenue MyAccount if not already done. You'd be able to make amendments much faster there going forward.