Taxation on the year of marriage or civil union
During the year of marriage or civil union, taxation for the employees works differently. From each couple, one is chosen as the Responsible Spouse. We will refer to the secondary employee as the non-responsible spouse.
Taxation for the responsible spouse is continuous. However, the non-responsible spouse is required to present at least two FS3s: one for income before the marriage (or civil union), and another for income earned after that date.
Moreover, on the second period (after marriage), the taxation starts over, ignoring any previous income earned during the period of registering as a Single person.
How to Set Employees as Married or in Civil Union on Buddy
Despite the complexity of the taxation, it is very simple to set up on Buddy. You only need to update the Marital Details.
Buddy will automatically calculate tax anew for the non-responsible spouse from the pay period that includes the marriage date.
Two FS3s will also be automatically generated for the non-responsible spouses. These will be presented as separate line entries in the F3 submission file.
Set Marriage Details in the Employee Profile
- Access the employee's profile from the People page
- In the personal details, scroll down to the Marital Details
- Update the Marital Status to "Married"
*note that currently Buddy does not provide a Civil Union option, and hence "Married" should also be selected in such cases - Input spouse and marriage details, including the Date of Marriage
- Select whether the employee is the Responsible Spouse (or not).
Update Tax Rate
Some employees will also file a new FS4 and request to get taxed at a different rate. This is not obligatory but may depend on individual circumstances.
If your employee has requested a change in tax, you can update it in their Tax Profile.
If a responsible spouse has their tax rate updated from Single to Married or Parent, all their main income for that tax year will be re-calculated under their new tax rate.