Self employed person employed spouse in prior year

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BraveInca

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I would be grateful for any advice on the following before I contact Revenue.

During the last tax year (2008) I employed my wife for various administrative tasks and paid her accordingly throughout the year. I was a VAT registered sole trader.

I planned to account for this in my tax return, and have her file a separate return, but I now realise that I (possibly) should have registered as an employer.

To further complicate matters, I am no longer a sole trader and have de-registerered as such for VAT and income tax purposes. I am a PAYE worker since the start of 09. I have not yet filed my return for 08 (its not due until Oct 09).

So... is is possible to retrospectively document this employment, and if so what are the steps?

Many thanks for any pointers.
 
Well depending on the tasks, would she have been considered self-employed? Did the position meet the ? If so then you can account for that on the joint F11 ( assuming you are taxed jointly) . She would be liable for Class S PRSI at 3% and, depending on income the 2% Health Contrib.

If she was employed, then she is not insurable for PRSI ( usually class M or K if the 2% h. levy due ) You would have had to get a cert of tax credits and srcop but that is not possible now for 2008. That leaves her on emergency. That is very messy as you are looking at registering as employer, filing P-35 ( now late ) paying whatever tax due ( now also late ) then de-registering.

It might be best to discuss with your accountant if you have one as there may be other issues to take into account.

www.revenue.ie/en/tax/it/leaflets/code-of-practice-on-employment-status.pdf

Sorry link didnt work but this is the file
 
Thanks a lot.

We are taxed jointly, but looking at that link, I don't think that a claim that she was self employed would stand up to much scrutiny, as she didn't have other clients.

On the other hand this route would certainly seem to be easier. If the net result was almost the same, and the amounts are fairly small, perhaps it would be simpler to state that she was self employed and then see what happens?
 
Would possibly work. Some risk of Revenue tackling it. Include amounts paid to her as an admin cost in your I&E and then record the income to her as a s/e income/trade. Has the effect of stretching your lower rate band. However as previously stated check with your qualified accountant/qualified tax advisor.
 
Unless she was over the income tax or PRSI limit, you have no liability, is my understanding. There is an exemption to employers PRSI for self-employed employing their spouses, so she is PRSI class M, Class K (health levies) may be payable depending on earning (I'm reading from the obtuse letter I got from the DSFA about my 'appeal'!) (Filling in a NIL form counts as an appeal, apparently).
 
yoganmahew said:
Unless she was over the income tax or PRSI limit, you have no liability, is my understanding. There is an exemption to employers PRSI for self-employed employing their spouses, so she is PRSI class M, Class K (health levies) may be payable depending on earning (I'm reading from the obtuse letter I got from the DSFA about my 'appeal'!) (Filling in a NIL form counts as an appeal, apparently).
Click to expand...

The OP might not have a liability but if the spouse is self-employed she would, surely, be assessed on Class S herself for 3% subject to the minimum.
 
I am also in a similar position. I am a sole trader with my wife doing the admin/finance area. Can I pay her a consultancy fee and she pay tax on it at the year end (form 11). She is also employed with another company (PAYE). Can she use any SRCOP which is left over from her other employment to reduce the tax on this? Also do I have to register as an employer and her as an employee or just pay her a consultancy fee on production of her invoice?
 
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