I was chatting to a wedding planner recently and among organising the ceremony, suits, in-laws, and venue, the subject of tax appears!
So apart from the celebrations, will the couple benefit on the tax front she asked ?
All married couples and registered civil partners are treated the same way for tax purposes.
There is no immediate impact on your finances in that you will continue to be taxed as two single people in the year of marriage.
THE ‘TO DO’ LIST:
- Let Revenue know your date of marriage and tell them when you got married giving both your own and your spouse’s PPS Numbers. This can be done by your tax agent on your behalf, or using My Account on ROS www.revenue.ie
- It is up to you if you choose to change your surname, if so let them know that too..
- Following the end of the tax year 31 December, you may be entitled to a refund of tax – this is worked out by comparing how much tax you paid as single individuals and what you might have paid if you were jointly assessed and it only runs from the date of marriage to the end of the year. Refunds are repaid to each spouse in proportion to the amount of tax each has paid.
- In very broad terms by way of example : Rachel and Harvey; Date of marriage 19th May 2018. Taxed as single people in 2018. Total tax paid for both €50,000. Rachel paid €35,000 and Harvey €15,000. If they had been jointly assessed they would have paid say €45,000. The difference is €5000. As they married in May, the refund is apportioned to the number of months married i.e. €5000 x 9/12 = €3,750 and this will be split between them in proportion to the ratio of tax paid by each in the year.
- There are three options to consider : Joint assessment? Separate assessmnet? Separate treatment?
- Joint assessment is the option that benefts most couples as you are chargeable to tax on your combined total income. You should inform Revenue before 31 March of the following year 2019 if you wish to choose this option.
- Separate assessment is the option if you wish to continue to be taxed as single people during the year and married tax credit is divided equally between you. Any unused tax credits, reliefs and rate bands can be transferred between spouses. In effect the outcome will be the same as joint assessment. You must request separate assessment also before 31 March in the year you want it implemented.
- Separate Treatment is rarely used in practice – both are taxed as single individuals but no credits or rate bands can be transferred between spouses.
- Your partner’s residence may affect your tax! If you are resident in Ireland and your spouse or civil partner is not, you will be taxed as a single person and only entitled to the single rate band. If your foreign marriage or civil partnerhsip is registered with the Department of Justice and Equality, then you will be taxed in the same way as an Irish couple.
- Talk to us tax experts to assist you in deciding what option is for you!