TAX TIPS FOR MAMAS & PAPAS
Anyone planning to change their working arrangements after the birth of a child should recognise the likely tax implications, according to a report in The Sunday Business Post.
This isn’t necessarily bad news, of course. A person may be entitled to a tax refund for the current tax year if they have a new working arrangement, such as job-sharing or part-time work. Also, a couple should generally expect a tax refund if the mother had been working full-time before going on maternity leave.
“If you stop working halfway through the year and go on maternity leave, you are still entitled to your full tax credits and full rate band,” according to Pat O’Brien, a director in Ernst & Young.
Couples are advised to maximise their use of the standard rate band to pay tax at 20% on as much of their income as possible.
An additional tax credit for home carers is also available for married couples if a partner decides to stay at home for most of the time to mind the children or a dependant relative. An individual in this situation can earn up to €5,800 and still qualify for this credit.
“However, Revenue said families who claimed this credit ‘were not entitled to the extended standard rate cut-off point normally given to married couples where both spouses are in receipt of income.”
If you require further information on the tax treatment of couples contact Noone Casey for further details.
Tags: Noone Casey, Personal finance, taxation