Firstly, congratulations on your recent or upcoming nuptials! While there are many things that you need to decide upon today, tomorrow and over the course of your marriage, one of the most important decisions you and your spouse can make is how you are set to be taxed.
Your tax assessment options
In the Republic of Ireland, married couples and couples in a civil partnership can choose whether they are jointly, separately or singly assessed for their taxation. It’s up to you and your spouse to decide which form of assessment is the best fit for you, your family and your future.
The most important thing to remember is that no matter which of the following assessment types you choose, it is your obligation to notify Revenue of your decision. Otherwise, you will continue to be assessed as two single people, just like you were before you married.
When notifying Revenue, you’ll be asked for your exact date of marriage along with you and your spouse’s Personal Public Service numbers (PPS number).
If the tax you pay as two single people is greater than the tax that would be payable if you were taxed as a married couple, you can claim the difference in the form of a tax rebate. It should be noted that tax rebates are only due from the date of marriage and will be calculated after December 31st in the year of your marriage.
Joint Assessment is also known as ‘Aggregation’ and is usually the most favourable choice for couples due to its flexibility. With Joint Assessment, the tax credits and standard rate cut-off point can be allocated between both of you to suit your particular circumstances:
1. If you both have taxable income, you can nominate one of you to be what is known as the “assessable spouse”.
2. If only one of you has taxable income, the standard rate cut-off point and all tax credits are given to that “assessable spouse”.
Remember though, you have to inform Revenue of your choice of assessment type and nominate your “assessable spouse”. If you fail to, the spouse with the higher income becomes the “assessable spouse” until Revenue is notified.
While Joint Assessment is automatically given by Revenue when you notify them of your marriage, you don’t have to stick with it if you don’t want to and might prefer to be separately assessed.
If you choose to be separately assessed, your tax affairs are dealt with independently of those of your spouse. While the Married Tax Credits, Age Tax Credits, Blind Person’s Tax Credits and Incapacitated Child Tax Credits will continue to be divided equally between you (if are eligible), the balance of the tax credits are applied to each of you in proportion to the cost borne by you.
Separate Assessment can be claimed either verbally or in writing and the claim can be made by either spouse. The PAYE tax credit and employment expenses, if any, are then allocated to this “assessable spouse”.
Any other tax credits that remain unused by one spouse, may be claimed by the other spouse. Any unused tax bands and tax credits apart from the PAYE tax credit and employment expenses, can be transferred to the other spouse at the end of the tax year.
Separate Treatment is different to Separate Assessment. Essentially, each spouse is treated as a single person for tax purposes, taxed on their own income, allocated tax credits and cut-off points as a single person, and required to pay their own tax and complete their own ROI (Return of Income) forms.
While Separate Treatment can be claimed either verbally or in writing, unfortunately one spouse cannot claim relief for payments made by the other and there is no right to transfer tax credits or Standard Rate Cut-Off Point to each other.
Separate Treatment is not as popular a method of tax assessment for married couples or civil partners as Joint Assessment or Separate Assessment, mainly because any unused tax credits and cut-off points cannot be transferred. That said, it can be beneficial where one spouse has income from foreign employment.
Claim Tax Back
For more information on how to choose to be taxed as a married couple, contact our team of tax experts at Irish Tax Rebates.
Check if you are owed tax back with our simple form – within 60 seconds you will be on your way to a tax rebate! We have the highest average tax rebate in Ireland and the lowest fee; and if you aren’t owed any tax back, there is no fee applied. To get the ball rolling, you can apply for your tax back online today.