Will I be fully taxed if....

py2006

....I accept a job for Nov-Dec.

(Sorry if this is in the wrong section, I wasn't sure where to post it)

I worked from Jan - August but I am currently unemployed and not claiming social welfare.

I have been offered a job for the last two months of the year. Not ideal, but the money and experience are too good to turn down. A friend made an interesting statement to me over a pint, he reckons that I won't be paying much tax on this! I haven't a clue when it comes to tax etc.

Can any wise aul soul advise me here?

Cheers

Mr. Presentable

You'll pay full tax but may be able to reclaim some at the end of the tax year.

Moonbeam

It depends on what tax credits you have used up and what you have left for the year,but as you were not working for a few months you should be able to use up these tax credits on top on the credits you would have for Nov and Dec.

i71jskz5xu42pb

Your tax free allowance is worked out on an annual basis. It's generally prorated by your employer month by month. From Jan to Aug you will have used 8/12ths of your allowance. In the last two months you be able to use the remaining 4/12 - essentially getting twice the TFA per month.
It'll make some difference but not a huge amount.

py2006

Thanks guys. I wasn't certain on this! I really don't understand tax credits and all that stuff.

seamus

It's actually pretty simple.

You take the amount that you've earned in a year. Tax is payable at 20% on the first 32,000 and at 42% on anything over that.

Once you've calculated how much tax you need to pay, you subtract your "Tax Credits" (You got a cert with these at the start of the year) from this amount to give you the net tax payable.

As Paschal points out, employers generally work out this on a month-by-month basis (or week-by-week depending on how you're paid). It seems a little more complex, but it's not really.

For example, let's say your salary in your last job was €36k. This works out at €3k gross per month.

Anything up to €2,660 is taxable at 20% (€32k/12), and the rest is taxable at 40%. So the total tax payable on that €3k comes to €668.

The normal tax credits for a single year are €1,760. So in a month, you have €147 in tax credits. Take this away from your tax payable, and it comes to net tax payable of €521

So if that continues for the 8 months including August this year, you will have earned
€24,000 (3 x 8), and paid €4,168 in tax (521 x 8). Even though you're not working September and October, your tax credits still exist - so by not working these two months, the €147 tax credits per month are still available to you. So at the end of November, you are entitled to an extra 2 months' tax credits on top of November's. So let's say you resume working at the same pay in November.

The tax payable is still €668 at the end of November. But you have €441 in tax credits (147 x 3). So you only pay €227 in tax. Thus effectively giving you "back" any excess tax you've paid.

They're simple figures - there are extra deductions such as PRSI which you don't claim back.

py2006

Thanks Seamus. I have to read that a couple times for it to sink in! :eek:

I was only on 25,000 from Jan to Aug but the Nov - Dec job is 40,000. There is a possibilty of it going on longer but for now the initial contract is till end of Dec.

blorg

You shouldn't have to claim anything back if you are working those two months at the end of the year; you will be taxed less in the first place to take into account the months you were not working.

If you were working September-October but then NOT November-December, you would then be in a position where you would claim back.