American Wife - Odd tax situation

minidazzler

Hi, I've recently married my Wife, she is American Living in Ireland, working in America remotely and paid into her Irish account. She pays taxes in the united states. She earns about 18500 per year and pays around 3 k in taxes because america is awful for taxation. She is a contractor in her role.

My query is whether we could be jointly assessed over here and she could use the tax she pays in the states for a tax credit over here. I earn about 38k per annum so hoping to avoid the 40% though my pension may help with that.

Marcusm

If you married and living together then there is no essential reason why you could not elect for joint assessment. The US tax would be available as a credit against Irish tax charged on the same income.

dennyk

This is something you probably need a tax professional to assist you with, and one who is experienced in matters of foreign taxation. The US tax she is paying is not ordinary income tax, but rather a Social Security and Medicare tax that self-employed individuals are responsible for paying, and as such the rules around tax credits here might not apply in the same way to those US tax payments. She is most likely not paying any US income tax at all, assuming she's availing of either the Foreign Earned Income Exclusion or the Foreign Tax Credit in the US, but those don't cover the self-employment tax, which is why she would still have some US tax liability.