# Stay at home mom



## kibs (13 Sep 2006)

Hi Guys,

I know this has probably been done to death at this stage but i am still confused about tax credits etc.

I am thinking of giving up work to become a stay at home mom with no income.

Basically my details are:

Hubby earns €50k a year.  I have worked out the tax but need to know if i am doing it right.

here goes

Pay                         50,000
41k at 20%                8,200
9k at 42%                  4,320
Total                       12,520
Less tax credit          - 3,260  (married persons allowance)
Less Carers Allowance  -  770
Total tax payable         8,490

Monthly tax payable    707.50

Monthly Wage           4166.66
Less tax                  - 707.50
Total Wage              3459.16
Before PRSI 

Am i doing it right???


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## ClubMan (13 Sep 2006)

Are you sure that you are on joint/aggregated married taxation? If not and you are currently on 20% or planning to give up work then you should switch to it as it should be more beneficial to you. If there is outstanding tax then you should reclaim it for up to the last 4 years.

Try putting the figures into [broken link removed] - first as a married couple with two incomes and then as a married couple with one income - just to sanity check them. It may not be 100% accurate or take all issues into consideration but it should be a good start. You may also need to manually factor in some additional tax credits/allowances (e.g. _Home Carer's Tax Credit _if applicable) - see here.


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## kibs (13 Sep 2006)

Thanks for the info.

We r currently being assessed as a married couple coz i earn less than the cut off point of €32k so transfer the rest to my hubby as it stands.

will check out the calculator now.

Thanks again


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## ClubMan (13 Sep 2006)

OK - so you are already on joint/aggregated married taxation and benefiting from that presumably. Good. How much do you earn right now?


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## kibs (13 Sep 2006)

I earn €28K at the moment so transfer €4 to my husband already.


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## Tenacious (13 Sep 2006)

Your husband will be entitled to the employee's tax credit of €1,490 if he has Schedule E employment and is not a propriety director (i.e. not owning more than 15% of the share capital of a company). Schedule E is the tax term used to describe income derived from employments, directorships and pensions arising in Ireland.


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## kibs (13 Sep 2006)

Is this in addition to the married persons tax credit of €3260??


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## Tenacious (13 Sep 2006)

Yes. You will see it on your Certificate of tax credits.


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## kibs (13 Sep 2006)

Oh i think is this the PRSI credit??  Sorry really messed up with whole tax credit bands etc.  

Doing my head in trying to work out what we will get if i give up - dont want to do anything drastic and then find out we r in a worse position than i had calculated 

Thanks


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## liteweight (13 Sep 2006)

Is the carer's allowance relating to children?


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## kibs (13 Sep 2006)

Dont quote me - coz i know nothing really, but i was told if i stay at home i could claim the carers allowance coz basically i would be caring for our daughter.


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## ClubMan (13 Sep 2006)

Tenacious said:


> Schedule E employment


What does this mean in layman's terms - self employed or something?


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## ClubMan (13 Sep 2006)

kibs said:


> Dont quote me - coz i know nothing really, but i was told if i stay at home i could claim the carers allowance coz basically i would be caring for our daughter.


Are you sure that you don't mean the _Home Carer's Tax Credit_ that I mentioned earlier? Carer's Allowance is a means tested _SW _payment. Carer's Benefit is the _PRSI _linked none means tested equivalent. _Carer's Allowance/Benefit _is not relevant to the care of children unless they are need full time care due to illness/disablement etc.


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## kibs (13 Sep 2006)

Woops i took this to be Schedule E - employee paying PRSI


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## kibs (13 Sep 2006)

See i know nothing!!!!


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## ClubMan (13 Sep 2006)

Judging by _Karl Grabe's _tax calculator the following is a rough idea of the difference:

Both spouses working (€50K + €28K): take home = €61.5K

One spouse working (€50K): take home = €40.1K

These figures assume both spouses are _PAYE _on _Class A PRSI _getting the normal tax credits/allowances and do not take account of additional credits such as _Home Carer's Tax Credit _etc.


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## kibs (13 Sep 2006)

Thanks Clubman thats brillant - all i needed was someone to put it into plain english for me.


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## ClubMan (13 Sep 2006)

Bear in mind that those figures are just rough and the actual difference will depend on the specifics of your situation.


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## Ham Slicer (13 Sep 2006)

You should note that the home carers credit is not available where the increased rate band has been taken up by your husband.  It's one or the other.


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## liteweight (13 Sep 2006)

Ham Slicer said:


> You should note that the home carers credit is not available where the increased rate band has been taken up by your husband.  It's one or the other.



Does the above not relate to staying at home to look after an elderly or infirm relative? The OP seems to think it refers to looking after one's children.


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## Ham Slicer (13 Sep 2006)

liteweight said:


> Does the above not relate to staying at home to look after an elderly or infirm relative? The OP seems to think it refers to looking after one's children.



The home carers tax credit is also available if staying at home to look at your child, but as I said it can't be claimed in addition to the increased rate band.  It's one or the other.


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## ClubMan (13 Sep 2006)

As I said - don't confuse the _Carer's Benefit/Allowance SW _payments to carers of ill/disabled individuals with the _Home Carer's Tax Credit _which is not restricted to carers of ill/disabled individuals and is available to parents who look after their children full time (with certain conditions such as those outlined by _Ham Slicer_). 

_Ham Slicer _- isn't it the case that the increased standard rate band issue might only preclude claiming the credit for the remainder of this year for example but that next year if one parent is not working and is minding the child(ren) at home then the increase in the standard rate band is no longer an issue (only one person working) so the credit may be claimed? I know that I found this a bit confusing when we had our kid last year but ultimately we received the credit from last year even though my wife was working for part of the year with me on 42% and her on 20% in case that's relevant...


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## Ham Slicer (14 Sep 2006)

ClubMan said:


> _Ham Slicer _- isn't it the case that the increased standard rate band issue might only preclude claiming the credit for the remainder of this year for example but that next year if one parent is not working and is minding the child(ren) at home then the increase in the standard rate band is no longer an issue (only one person working) so the credit may be claimed? I know that I found this a bit confusing when we had our kid last year but ultimately we received the credit from last year even though my wife was working for part of the year with me on 42% and her on 20% in case that's relevant...



The HC credit and increased rate band is on an annual basis, so you need to claim one or the other for the full year.

It's possible that you weren't actually entitled to the HC credit in 2005 as you wife had some income.  If the income was in excess of €6,620 there was no entitlement to the HC credit.  Not sure of your income figures but it may have been worthwhile claiming the increased rate band as an alternative to the HC credit.

Indeed if you look at this years tax credit cert and see that you have the HC credit and increased rate band, it is wrong.  You will end up with a €770 underpayment for the year (ignoring everything else).

The HC credit is worth a max of €770 pa.  The increased rate band is worth a mas of €9,000 (€41K - €32K) @22% = €1,980.  

It's up to the taxpayer to elect for which method they want.


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## ClubMan (14 Sep 2006)

Thanks - I'm still a bit confused but if there is any discrepancy then I'm sure that it'll get sorted when I get around to requesting a _P21 _balancing statement for 2005 once I get some additional info together (_MED1_ stuff).


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## polaris (14 Sep 2006)

I think Clubman is correct here. The relevant information leaflet:

[broken link removed]

states that "if the couple claims the increased Standard Rate Cut Off Point for *dual* income couples, the Home Carer's tax credit will not be due"

My reading of this and the worked examples on the leaflet is that if the home carer has *no* income for the year, the SRCOP on the working spouse will be 41K and the Home Carer's tax credit is also due

However, if the home carer also has an income of below €6,620, they are now a dual income couple and choose the more beneficial of claiming the Home Carer's tax credit or receiving an increase in the SRCOP to a value between €41,000 - €47,620.


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## Tenacious (15 Sep 2006)

Ham Slicer, you have got it wrong on this point. The increased standard rate band for a married couple is €41,000 + income of other spouse to a max of €23,000. A single persons standard rate cut off in 2006 is €32,000, but a married couple with *one* income is €41,000. 

You are right where you said that a married couple cannot claim both the increased standard rate band and the home carer's tax credit. However if there is just one income, then there is no standard rate band to increase! And the Home Carer's Credit is claimed. The couple will be taxed as follows: €41,000 at 20% and Balance of Income at 42%. If the husband's taxable income is say €50,000, then the gross tax is €11,980. (It should be noted that in calculating total income no account is taken of the Carer's Allowance payable by the Department of Social, Community and Family Affairs).

If the spouse has already earned over €6,620 so far this year, it will be more beneficial for the couple not to claim the Home Carer's tax credit for this year and opt for the increased standard rate band. (i.e. no further action presuming the couple are jointly assessed).

Clubman, on a separate point, it is now possible to claim for Medical Expenses Relief for 2005 and order a P21 Balancing Statement for 2005 using the full suite of ROS on www.ros.ie . No need to fill out Med1's and get signatures (or Med2's for that matter!). P21's usually take about ten working days to issue.


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## Ham Slicer (15 Sep 2006)

Tenacious said:


> Ham Slicer, you have got it wrong on this point. The increased standard rate band for a married couple is €41,000 + income of other spouse to a max of €23,000. A single persons standard rate cut off in 2006 is €32,000, but a married couple with *one* income is €41,000.



Sure that's exactly what I said.

I know how SRCOP works.



Tenacious said:


> You are right where you said that a married couple cannot claim both the increased standard rate band and the home carer's tax credit. However if there is just one income, then there is no standard rate band to increase! And the Home Carer's Credit is claimed. The couple will be taxed as follows: €41,000 at 20% and Balance of Income at 42%. If the husband's taxable income is say €50,000, then the gross tax is €11,980. (It should be noted that in calculating total income no account is taken of the Carer's Allowance payable by the Department of Social, Community and Family Affairs).



I said that aswell.  The point I was making is that Revenue will sometimes also incorrectly grant the HC aswell.



Tenacious said:


> If the spouse has already earned over €6,620 so far this year, it will be more beneficial for the couple not to claim the Home Carer's tax credit for this year and opt for the increased standard rate band. (i.e. no further action presuming the couple are jointly assessed).




I said that aswell

Thanks for clearing all that up


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## Carpenter (15 Sep 2006)

Tenacious said:


> Clubman, on a separate point, it is now possible to claim for Medical Expenses Relief for 2005 and order a P21 Balancing Statement for 2005 using the full suite of ROS on www.ros.ie . No need to fill out Med1's and get signatures (or Med2's for that matter!). P21's usually take about ten working days to issue.


 
I signed up for ROS last month and got a P21 Balancing Statement with handsome cheque attached well with the ten working days, was well impressed with the service.


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## polaris (15 Sep 2006)

Tenacious said:


> If the spouse has already earned over €6,620 so far this year, it will be more beneficial for the couple not to claim the Home Carer's tax credit for this year and opt for the increased standard rate band. (i.e. no further action presuming the couple are jointly assessed).


 

It the home carer is earning >€6,620 the Home Carer's tax credit is no longer an option as this is the cut-off point for this tax credit. In this case the couple will automatically received the increased SRCOP up to a maximum of €23K.


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