# One income family tax implications



## LM26 (5 Jul 2010)

My husband is on €45k per year. We worked out a while ago that he would get approx €600 extra a month if I stayed at home with our first born (hypothetical) as a result of using my tax credits and availing of the home carers credit- does that sound about right?

Any help appreciated.

Thanks.


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## Pat Bateman (5 Jul 2010)

Hi there.

It sounds a little high to me.

The married tax credit is worth an extra €1,830 to your husband and the home carer credit is worth €900.  As you're probably aware, the PAYE tax credit isn't transferable.

The extra standard rate cut off point should be worth 21% of the extra €9,000 to him (i.e. €1,890).

I make that an annual "benefit" of €4,620 (or €385 per month).

Perhaps you're factoring in stuff like the childrens allowance which might explain the difference?  I don't know anything about that so I can't comment.


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## LM26 (6 Jul 2010)

Pat, thanks for reply. Yes I think from your calcs that childrens allowance must have been included when we worked this out previously. Thats €150 per month. But even at that €600 doesnt look right, its more like €535. Must try and find calcs of how we worked it out before. Thanks again!


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## DrMoriarty (6 Jul 2010)

Post-individualisation, I would have thought that the optimal net benefit to you as a family from a tax point of view would be for you to continue to work just one day a week, if such were possible? That way your husband's cut-off point would be much higher and the resulting drop in tax liability could outweigh the marginal cost of one day's child-minding per week.

It would be great if someone more literate/knowledgeable in this area could crunch the numbers on a hypothetical comparison. Judging from some recent threads (like this one or this one), it's a live concern.


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## LM26 (6 Jul 2010)

DrMoriartry yes it would be great to know that optimum solution. I have no idea how I will feel workwise after having a baby (pg) but would be great to know for certain the cost effects of those couple of options tax wise.


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## Pat Bateman (6 Jul 2010)

DrMoriarty said:


> Post-individualisation, I would have thought that the optimal net benefit to you as a family from a tax point of view would be for you to continue to work just one day a week, if such were possible? That way your husband's cut-off point would be much higher and the resulting drop in tax liability could outweigh the marginal cost of one day's child-minding per week.
> 
> It would be great if someone more literate/knowledgeable in this area could crunch the numbers on a hypothetical comparison. Judging from some recent threads (like this one or this one), it's a live concern.


 
I don't get this. What benefit accrues to the husband (from a tax perspective) if the wife works one day a week?


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## Suavio56 (23 Sep 2010)

I would love some clarity on this as well. My wife is planning on giving up work after our second child. My understanding is that if she gives up work she cannot transfer any standard rate cut-off to me - however if she works part-time (1 day a week) then she can transfer to me. As a result I'd be paying more at the lower tax rate?

Is my understanding correct?


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## deadlyduck (23 Sep 2010)

A married, dual income couple have the following additional tax benefits over a single income married couple:


```
SRCOP            Tax credits
Married 2 incomes      Max 72800 [A]     7320 [B]
Married single income  Max 45400 [A]     6390 [B]

A: The actual amount of SRCOP depends on the split of income for the married 2 
income couple. Assuming the higher earner is on at least €45400 s/he can claim 
this as SRCOP. The lower earner can claim the lower of his/her 
earnings and €27400. 
For a married, 1 income couple, the SRCOP is the lower of earnings and €45400.

B: The tax credits are assumed as follows (and may be lower if 1 income is very 
low):

Married credit          3660 (in total)
Employee credit         1830 (for each employee; not transferable)
Stay at home spouse      900 (only for Married 1 income couples)
```
The above ignores child benefit.

You can check various scenarios (it allows for married dual income v married single income scenarios) using my calculator at http://taxcalc.eu/monthlyss


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## Suavio56 (27 Sep 2010)

Deadlyduck,

Thanks for that very comprehensive reply.

Much appreciated


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