Example 6. Marriage with common children residing in the Community of Madrid
The couple made up of Mr. AHG and Mrs. PLC, 40 and 38 years old, respectively, have three children with whom they live. The oldest is 6 years old, the second is 4 years old and the third is 1 year old. None of the children has obtained income, excluding exempt income, of more than 8,000 euros per year nor has they filed a tax return Personal Income Tax
Determine the amount of the personal and family minimum for both spouses under individual taxation and joint taxation of the family unit for the purposes of calculating the state tax and the regional tax.
Solution:
Previous note: The Community of Madrid has established in article 2 of its Consolidated Text of the Legal Provisions regarding taxes transferred by the State, approved by Legislative Decree 1/2010, of October 21, minimum amounts for descendants to replace those established in article 58 of the Personal Income Tax Law . However, it must be taken into account that the minimums for the first and second child coincide with those established in the aforementioned article 58. Those relating to the third and fourth children and subsequent children do determine different amounts that will have to be applied to calculate the regional tax.
1. Individual taxation of Mr. AHG:
|
State minimum |
Autonomous minimum | ||||
|---|---|---|---|---|---|
| Taxpayer tax-free threshold | 5,500 | Taxpayer tax-free threshold | 5,550 | ||
| Allowance for descendants | Child 1 (6 years old) (50% s/2,400) | 1,200 | Allowance for descendants | Child 1 (6 years old) (50% s/2,400) | 1,200 |
| Child 2 (4 years old) (50% s/2,700) | 1,350 | Child 2 (4 years old) (50% s/2,700) | 1,350 | ||
| Child 3 (1 year) (50% s/4,000) | 2,000 | Child 3 (1 year) (50% s/4,000) (1) | 2,200 | ||
| Child under 3 years old (50% s/2,800) | 1,400 | Child under 3 years old (50% s/2,800) | 1,400 | ||
| Minimum total for descendants | 5,950 | Minimum total for descendants | 6,150 | ||
| Minimum personal and family total | 11,500 | Minimum personal and family total | 11,700 | ||
2. Individual taxation of Mrs. PLC:
|
State minimum |
Autonomous minimum | ||||
|---|---|---|---|---|---|
| Taxpayer tax-free threshold | 5,550 | Taxpayer tax-free threshold | 5,550 | ||
|
Allowance for descendants |
Child 1 (6 years old) (50% s/2,400) | 1,200 |
Allowance for descendants |
Child 1 (6 years old) (50% s/2,400) | 1,200 |
| Child 2 (4 years old) (50% s/2,700) | 1,350 | Child 2 (4 years old) (50% s/2,700) | 1,350 | ||
| Child 3 (1 year old) (50% s/4,000) | 2,000 | Child 3 (1 year old) (50% s/4,000) | 2,200 | ||
| Child under 3 years old (50% s/2,800) | 1,400 | Child under 3 years old (50% s/2,800) | 1,400 | ||
| Minimum total for descendants | 5,950 | Minimum total for descendants | 6,150 | ||
| Minimum personal and family total | 11,500 | Minimum personal and family total | 11,700 | ||
3. Taxation joint family unit (2)
|
State minimum |
Autonomous minimum | ||||
|---|---|---|---|---|---|
| Taxpayer tax-free threshold | 5,550 | Taxpayer tax-free threshold | 5,550 | ||
|
Allowance for descendants |
Child 1 (6 years old) | 2,400 |
Allowance for descendants |
Child 1 (6 years old) | 2,400 |
| Child 2 (4 years old) | 2,700 | Child 2 (4 years old) | 2,700 | ||
| Child 3 (1 year old) | 4,000 | Child 3 (1 year old) | 4,400 | ||
| Child under 3 years old | 2,800 | Child under 3 years old) | 2,800 | ||
| Minimum total for descendants | 11,900 | Minimum total for descendants | 12,300 | ||
| Minimum personal and family total | 17,450 | Minimum personal and family total | 17,850 | ||
Notes to the example:
(1) In determining the minimum for descendants, the amount approved by the Community of Madrid has been applied, which modifies the amount corresponding to the third and subsequent children. (Back)
(2) The minimum taxpayer in article 57 of the Personal Income Tax Law is in all cases 5,550 euros per year regardless of the number of members in the family unit. However, in the joint taxation of the family unit the tax base can be reduced by 3,400 euros per year, prior to the legally established reductions. See, in this regard, Chapter 13 above, which discusses the reductions in the general tax base and of savings . (Back)