The position is that the tax rates and bands for a married couple for 2004 are as follows: married couple, one spouse with income — first €37,000 @ 20% and balance @ 42%; married couple, both spouses with income — first €37,000 with increase of €19,000 maximum @ 20% and balance @ 42%. In the case of married couples with two incomes the standard rate band available to one spouse will not be greater than that available to a one income married couple, that is, €37,000. The second spouse may avail of the balance of the €56,000 band.
A home carer tax credit of €770 can be claimed by married persons who are jointly assessed to tax and where one spouse works at home to care for a dependent person, which includes a dependent child, provided certain conditions are satisfied. A married couple cannot claim both the home carer tax credit and the increased standard rate band. They can, however, claim whichever of the two is the most beneficial. The home carer tax credit is not due where the home caring spouse's income equals or exceeds €6,620.
The following eight examples show the income tax payable by single and double income families as requested by the Deputy on a gross income of €56,000 for the current tax year. The examples refer to earners in the PAYE and self-employed sectors and are based on the assumption in each case that the married couple is jointly assessed for tax purposes.
Example 1
In this example it is assumed that the individual is in the PAYE system.
One income family with no dependent children.
Gross Income
|
€56,000
|
|
Band Available
|
€37,000
|
|
Band Utilised
|
€37,000
|
Tax
|
€37,000 @ 20% =
|
€7,400
|
|
€19,000 @ 42% =
|
€7,980
|
Gross Tax Due
|
|
€15,380
|
Less Tax Credits
|
|
|
Personal Credit
|
(€3,040)
|
Employee Credit
|
(€1,040)
|
|
= Total Credits
|
|
(€4,080)
|
Net Tax Due
|
|
€11,300
|
Example 2
In this example it assumes that both spouses are working in the PAYE sector.
Two income family with no dependent children and income split between spouses €28,000: €28,000.
Joint Income
|
€56,000
|
|
Spouses Income
|
€28,000
|
€28,000
|
Band Available
|
€28,000
|
€28,000
|
Band Utilised
|
€28,000
|
€28,000
|
Tax liability
|
€5,600 (€28,000 @ 20%)
|
€5,600 (€28,000 @ 20%)
|
Gross Tax Due
|
€11,200
|
|
Less Tax Credits
|
|
|
(€1,520)
|
Personal Credit
|
(€1,520)
|
(€1,040)
|
Employee Credit
|
(€1,040)
|
(€2,560)
|
|
(€2,560)
|
= total credits
|
|
(€5,120)
|
Net Tax Due
|
|
€6,080
|
Example 3
In this example it is assumed that both spouses are in the PAYE system.
Two income family with no dependent children and income split between spouses €37,000: €19,000.
Joint Income
|
€56,000
|
|
Spouses Income
|
€37,000
|
€19,000
|
Band Available
|
€37,000
|
€19,000
|
Band Utilised
|
€37,000
|
€19,000
|
Tax Liability
|
€7,400 (€37,000 @ 20%)
|
€3,800 (€19,000 @ 20%)
|
Gross Tax Due
|
|
€11,200
|
Less Tax Credits
|
|
|
(€1,520)
|
Personal Credit
|
(€1,520)
|
(€1,040)
|
Employee Credit
|
(€1,040)
|
= Total Credits
|
|
(€5,120)
|
Net Tax Due
|
|
€6,080
|
Example 4
In this example it is assumed that the individual is in the PAYE system.
One income family with dependent children.
Gross Income
|
€56,000
|
|
Band Available
|
€37,000
|
|
Band Utilised
|
€37,000
|
|
Tax
|
€37,000 @ 20% =
|
€7,400
|
|
€19,000 @ 42% =
|
€7,980
|
Gross Tax Due
|
|
€15,380
|
Less Tax Credits
|
|
|
Personal Credit
|
(€3,040)
|
|
Employee Credit
|
(€1,040)
|
|
Home carers
|
(€770)
|
|
= Total Credits
|
|
(€4,850)
|
Net Tax Due
|
|
€10,530
|
Example 5
In this example it is assumed that the earner is self-employed.
One income family with no dependent children.
Gross Income
|
€56,000
|
|
Band Available
|
€37,000
|
|
Band Utilised
|
€37,000
|
|
Tax
|
€37,000 @ 20% =
|
€7,400
|
|
€19,000 @ 42% =
|
€7,980
|
Gross Tax Due
|
|
€15,380
|
Less Tax Credits
|
|
|
Personal Credit
|
|
(€3,040)
|
Net Tax Due
|
|
€12,340
|
Example 6
In this example it is assumed that each spouse is self employed.
Two income family with no dependent children and income split between spouses €28,000: €28,000.
Joint Income
|
€56,000
|
|
Spouses Income
|
€28,000
|
€28,000
|
Band Available
|
€28,000
|
€28,000
|
Band Utilised
|
€28,000
|
€28,000
|
Tax liability
|
€5,600 (€28,000 @ 20%)
|
€5,600 (€28,000 @ 20%)
|
Gross Tax Due
|
€11,200
|
|
Less Tax Credits
|
|
|
(€1,520)
|
Personal Credit
|
(€1,520)
|
= total credits
|
|
(€3,040)
|
Net Tax Due
|
|
€8,160
|
Example 7
In this example it is assumed that both spouses are self employed.
Two income family with no dependent children and income split between spouses €37,000: €19,000.
Joint Income
|
€56,000
|
|
Spouses Income
|
€37,000
|
€19,000
|
Band Available
|
€37,000
|
€19,000
|
Band Utilised
|
€37,000
|
€19,000
|
Tax Liability
|
€7,400 (€37,000 @ 20%)
|
€3,800 (€19,000 @ 20%)
|
Gross Tax Due
|
€11,200
|
|
Less Tax Credits
|
|
|
(€1,520)
|
Personal Credit
|
(€1,520)
|
= Total Credits
|
(€3,040)
|
|
Net Tax Due
|
€8,160
|
|
Example 8
In this example it is assumed that the earner is self employed.
One income family with dependent children.
Gross Income
|
€56,000
|
|
Band Available
|
€37,000
|
|
Band Utilised
|
€37,000
|
|
Tax
|
€37,000 @ 20% = €7,400
|
|
|
€19,000 @ 42% = €7,980
|
|
Gross Tax Due
|
|
€15,380
|
Less Tax Credits
|
|
|
Personal Credit
|
(€3,040)
|
|
Home carers
|
(€770)
|
|
= Total Credits
|
|
€3,810
|
Net Tax Due
|
|
€11,570
|