Which is the best option for taxation of a married couple?

Tim76

Hi all,

Anybody have any advice on this?

Citizens Information website notes that the joint assessment (or "aggregation") option is usually the most favourable basis of assessment. But the allocation of tax credits and standard rate cut-off points has me confused.

We are both earning about the same, a bit over the average industrial wage, I'm a small bit higher.

IAMAMORON

The married credits and allowances were introduced to facilitate families with one parent home keeping and one parent working full time. Given that you are both working and you are on similar earning levels I would opt for a separate assessment. There is no benefit in utilising marriage allowances unless one of you opts to stop working to bring up children, although kids don't have to be involved. For example your partner could opt for a career break etc.

Calahonda52

IAMAMORON wrote: »

The married credits and allowances were introduced to facilitate families with one parent home keeping and one parent working full time. Given that you are both working and you are on similar earning levels I would opt for a separate assessment. There is no benefit in utilising marriage allowances unless one of you opts to stop working to bring up children, although kids don't have to be involved. For example your partner could opt for a career break etc.

Not my recollection

namenotavailablE

+ 1 to Calahonda's recollection.

The current system can result in a one income household netting a lower amount than a dual income household with the same combined gross pay as the single income household.

IAMAMORON

Calahonda52 wrote: »

Not my recollection

I am not going to argue, but that is why they exist.

Try harder.

Tim76

namenotavailabl wrote: »

The current system can result in a one income household netting a lower amount than a dual income household with the same combined gross pay as the single income household.

So joint assessment would be the way the go? Do you know if it is it possible to change back if it turns out we end up paying more tax or if there's a way to check beforehand?

bee06

Tim76 wrote: »

So joint assessment would be the way the go? Do you know if it is it possible to change back if it turns out we end up paying more tax or if there's a way to check beforehand?

Joint assessment and keep your tax credits and band split as the standard split and it will have no impact. Whatever you do you won’t pay more tax overall but one could end up paying more tax and the other paying less tax if you change the splits. I’m assuming you are both earning above the tax band threshold. It’s easy to change through MyAccount on revenue.ie after if something changes.

IAMAMORON

Tim76 wrote: »

So joint assessment would be the way the go? Do you know if it is it possible to change back if it turns out we end up paying more tax or if there's a way to check beforehand?

There is no point in getting jointly assessed unless one member of your marriage is not working. Otherwise it is pointless.

Tim76

bee06 wrote: »

Whatever you do you won’t pay more tax overall but one could end up paying more tax and the other paying less tax if you change the splits. I’m assuming you are both earning above the tax band threshold. It’s easy to change through MyAccount on revenue.ie after if something changes.

Hmmm, I'm assuming I might be the one paying more tax as I'm earning a bit more Which might not be as easy to change back once the deed is done!

Yes, we are both earning above the tax band threshold.

Tim76

IAMAMORON wrote: »

There is no point in getting jointly assessed unless one member of your marriage is not working. Otherwise it is pointless.

Cheers IAMAMORON. This could well be the case.

IAMAMORON

Tim76 wrote: »

Cheers IAMAMORON. This could well be the case.

If one partner was working part time and is not utilising their thresholds and tax credits there is an argument around it. But the part time job would need to be fairly minimal to consider joint assessment. You would only do it to shelter the income of the main household earner.

bee06

Tim76 wrote: »

Hmmm, I'm assuming I might be the one paying more tax as I'm earning a bit more Which might not be as easy to change back once the deed is done!

Yes, we are both earning above the tax band threshold.

Because you are both earning above the tax band threshold whether you are jointly assessed or assessed separately will make absolutely no difference to the tax you pay assuming you keep your standard tax credit and band split as is. In my opinion the benefit of joint assessment even if you are over the tax band threshold is that if one of your incomes goes down you don’t have to switch from separate assessment to joint. You can just change the allocation of your credits and tax band (between October and March only) on MyAccount.

Tim76

bee06 wrote: »

Because you are both earning above the tax band threshold whether you are jointly assessed or assessed separately will make absolutely no difference to the tax you pay assuming you keep your standard tax credit and band split as is. In my opinion the benefit of joint assessment even if you are over the tax band threshold is that if one of your incomes goes down you don’t have to switch from separate assessment to joint. You can just change the allocation of your credits and tax band (between October and March only) on MyAccount.

That's food for thought. She's public sector and I'm private so with Covid 19 about to tank the economy there's a good chance my income will be the one coming down or ceasing altogether.

namenotavailablE

Joint assessment offers most flexibility. This is useful where 1 person's income fluctuates (whether due to time off work for maternity or the variability of the economic environment).
If both spouses earn above the standard rate band of income it makes no difference.

Tim76

Hi guys,

I'm back again.

I'm just filling out the Assessable Spouse Election Form.

Stupid question but does anyone know where I can find out the exact Tax Credits & Standard Rate Band for me and my spouse? Am I looking for a pay slip or a P60?

Pawwed Rig

It entirely depends on how much you are earning. If each spouse earns more than €36,000 then it doesn't really matter although if one is self employed then it may make sense to be jointly assessed (currently in a race to get a joint assessment election form into Revenue for a client whose spouse had been given 6 months to live for example as there are extra tax credits to be had where an assessable spouse dies).

As with all tax matters the specifics of the personal situation will decide which is best for a given situation.

TLDR the question in the OP is too simplistic.

nhg

Tim76 wrote: »

Hi guys,

I'm back again.

I'm just filling out the Assessable Spouse Election Form.

Stupid question but does anyone know where I can find out the exact Tax Credits & Standard Rate Band for me and my spouse? Am I looking for a pay slip or a P60?

You will find these on your annual tax credit certificate which is issued annually - check in revenue correspondence. They should also be available to see on ROS My Account