Claiming Unemp Benefit, Can hubby have SRCOP

Hi Everyone,

This is my first time posting on this website so here goes.

My aunt & uncle received a form from Revenue saying that they had underpaid their taxes last year 2005 by 600 odd euro.

They asked me to have a look at it, details as follows:

• Wife didnt work last year however she did claim unemployment benefit for majority of year
• Hubby worked all year

In october they asked the revenue to treat them as married couple for tax credits and SRCOP etc but never heard anything back from revenue until they got this form.

Tax credits look in order i.e. hubby has both there tax credits allowance, but the SRCOP is still only 29400,

so my question is should this not be 38400 considering he has his wifes allowanace to or is he not entitled to it as she claimed unemployment?

I rang tax office this morn to be told that they couldnt open his file and to ring them back next week , but this means hubby & wife have to worry about owing them money until they find out differ,

if anyone can help i'd greatly appreciate it

Thanks,
littleangel xx

Don't forget that unemployment benefit is taxable.

Did they receive a balancing statement from revenue. If not, request one. This will show how much each earned and how it was calculated
In respect of your aunt the unemploymeny benefit is taxable. The first 6 weeks is tax free. For the sake of this situation lets assume that your aunt received unployment benefit for 45 weeks. She would then be taxed on 39 weeks
We'll also assume that she received 150 p w
Her income for tax purposes is therefore 150 * 39 = 5,850
Taxed @ 20% = 1,170
less PAYE allowance 1,270
Tax due Nil

Your uncles affairs as follows:
Income say 40,000
SRCOP 38,400 (married persons SRCOP)
Tax as follows
38,400 @ 20% = 7,680
1,600 @ 42% = 672
Gross tax 8,352
deduct tax credits from this, this can vary but should get a breakdown from the Tax credit cert for 2005.

Make sure all credits are being availed of
Did they pay any medicial expenses including prescribed medicines during the year
Do they have medical insurance
Bin charges
Union fees etc

Revenue normally increase the SRCOP by the amount of his wifes earnings (unemployment benefit * max of 46)
and reduce the reliefs by the same amount which is allowable at @ 20%. Revenue also increase your uncles credits by the PAYE allowance for his wife. Make sure this is being done for the current tax year. As soon as she stops claiming unemployment benefit advise revenue.

This in effect is similar to the above. The unemployment benefit is being taxed each week / month.

Thanks very much for your response.

I do have the balancing statement with me, that is where i was seeing the SRCOP from.

Details as follows:

Taxable Income: 33765.61

Charged as follows:

29400 @ 20% 5880.00
4365.61 @ 42% 1833.56

Tax Due: 7713.56

Less T/Credits: 4430.00
Taxes Deducted: 2640.61 7070.61

Tax Underpayment: 642.95

The balancing statement however does not state the wifes unemployment benefit in it.

The only indication i had that they were being taxed as a married couple were the increased tax credits.

Revenue have been making a lot of errors recently. Somewhere along the way your uncle & aunt appear to be taxed as individuals. You should contact the tax office or email them. See Here and click on contact locator
Tell them that your uncle & aunt are normally assessed jointly (Any unused SRCOP and or tax credits can be used by the other)
Your uncle should get an increased SRCOP to 42,000 for 2006. All his income will then be taxed @ 20%
In respect of his tax credits he appears to be only claiming the marriage credit of 3,160 and PAYE credit of 1,270
What about the other credits that can be claimed
Are they paying rent?

If I were you I would also check out previous years. You can go back 4 years.
My understanding is that unemployment benefit is taxable with the exception of the first 6 weeks as mentioned in a previous post. Maybe it is not taxable
Ask revenue when emailing them
If it is there will be no additional liability to income tax - see previous post
I calculate the situation for 2005 as follows

Taxable Income: 33765.61

Charged as follows:

33765.61 @ 20% 6753.12


Tax Due: 6753.12

Less T/Credits: 4430.00
Taxes Deducted: 2323.12

Tax Due Nil

Thanks a million for replying again.

I actually rang the locall number for Revenue this morning and explained the situation but if you see my original post, they could not open his file and told me to ring back next week!

The thing i am worried about, is that i want to pursue this further so that they wont have to pay the €642 hopefully, but if unemployment benefit is taxable then maybe they will actually owe more than this and i'll have made things worse !!!!

They rent their house of the council so dont claim any tax relief on that, bins also provided by council, and Aunt has med card for last year so i dont think there any extra expenses that they can claim!!

I will keep trying to get through to the Revenue anyway and let you know how i got on!
Thanks

If unemployment benefit is taxable your aunt is entitled to a PAYE credit in her own right
As explained in a prev post
The first 6 weeks is tax free. For the sake of this situation lets assume that your aunt received unemployment benefit for 45 weeks. She would then be taxed on 39 weeks
We'll also assume that she received 150 p w
Her income for tax purposes is therefore 150 * 39 = 5,850
Taxed @ 20% = 1,170
less PAYE allowance 1,270
Tax due Nil
If she is to continue on unemployment benefit her husbands tax credits are increased by 1270 and credits are decreased by the expected income @ 20%. The net effect is the same. In this way all taxes are being paid on the unemployment benefit. Should be no change in weekly /monthly pay.

Forgive my ignorance, but what is SRCOP?

See here.