Second income...tax question...do I have to pay any??

girlbiker

I have no idea about business matters so a little help would be appreciated. I work full time but have recently started freelance writing for different magazines/companies as a nixer. I'm making a nice amount of money and hopefully even more will come of it. What I need to know is what are the tax implications? Do I have to declare this income? I have to produce invoices on completion of the job for the companies but really I'm only using a template for this.
Any advice or expertise on this would be helpful!

Is there an amount you can earn on the side before having to pay tax?

Sleipnir

no, it's income, you must declare it and pay tax on it and there's no such thing as "earning on the side" as far as Revenue are concerned!

r3nu4l

Hiya girlbiker.

Short answer, yes you do have to pay tax.

If you are working full-time then you are more than likely earning more than enough to ensure that these new earnings are taxable. Contact revenue and they will tell you exactly what to do and send you the right forms.

girlbiker

Right,well thats not what I was hoping for...I thought there may have been a nice little clause that lets you earn up to (some amount) before having to pay tax, the naiveity!

What would happen if I didnt declare anything?

Kanchelskis

If you are issuing invoices and putting the money through your bank account then revenue can trace it pretty easily. You could get audited if payments are seen from the other company's side or from the unusual activity in your bank account.

If you dont declare it and get caught you will have to pay the tax along with the usual interest and penalties and possibly jail. GL!

r3nu4l

Kanchelskis wrote: »

If you are issuing invoices and putting the money through your bank account then revenue can trace it pretty easily. You could get audited if payments are seen from the other company's side or from the unusual activity in your bank account.

If you dont declare it and get caught you will have to pay the tax along with the usual interest and penalties and possibly jail. GL!

This! Seriously. Nobody likes to hear the answer but that's the way it is Also, just be aware that given the tax shortfall that the Government have announced it is likely that revenue will be under pressure to bring in as much of the nations' undeclared income as possible so they will be on the lookout imo. I know how you feel, I'm doing a similar line of 'extra work' and giving up the tax is always a bummer

zora

a little bit of advice...

1 register as self employed - can be done simply by filling out a form and sending to Revenue, download it from the web-site and fill it in.
2 if your invoicing companies, they will be claiming a tax deduction for your services, therefore you need to get no. 1 done. Also there are certain requirements set on the format of invoices, i.e. invoices have to have a sequential numbers and so on.
3 open a seperate bank account and lodge the income from this nixer in there - a business needs its own bank account, failure to comply can incur fines
4 start to keep receipts for everything, not all expenses may qualify but leave that to the experts to decide. i.e. if working from home a certain amount of say electricity/phone bills may qualify for expenses and can be deducted from the income.
point to note - first year in business you don't need to submit a tax return, so do the above and see how things are going.
5. watch the vat threshold.....do u need to register????

and finally, if you are doing that well consider hiring a professional..........i.e. accountant or tax consultant.

Kanchelskis

zora wrote: »

a little bit of advice...

1 register as self employed - can be done simply by filling out a form and sending to Revenue, download it from the web-site and fill it in. Not necessary if earning < €3k outside of your PAYE income

4 start to keep receipts for everything, not all expenses may qualify but leave that to the experts to decide. i.e. if working from home a certain amount of say electricity/phone bills may qualify for expenses and can be deducted from the income. - there will be CGT implications if you apportion home bills so this will probably not be worthwhile.

point to note - first year in business you don't need to submit a tax return, so do the above and see how things are going - to avoid confusion: you do, its just submitted the year following the startup year

mkdon05

zora wrote: »

a little bit of advice...

1 register as self employed - can be done simply by filling out a form and sending to Revenue, download it from the web-site and fill it in.More than likely a Form 12 situation
2 if your invoicing companies, they will be claiming a tax deduction for your services, therefore you need to get no. 1 done. Also there are certain requirements set on the format of invoices, i.e. invoices have to have a sequential numbers and so on.
3 open a seperate bank account and lodge the income from this nixer in there - a business needs its own bank account, failure to comply can incur fines Not True.
4 start to keep receipts for everything, not all expenses may qualify but leave that to the experts to decide. i.e. if working from home a certain amount of say electricity/phone bills may qualify for expenses and can be deducted from the income. Terrible advise, as above, this has CGT issues which will far outweigh any short term tax savings.
point to note - first year in business you don't need to submit a tax return, so do the above and see how things are going. Again Wrong
5. watch the vat threshold.....do u need to register????

and finally, if you are doing that well consider hiring a professional..........i.e. accountant or tax consultant.

Zora, I appreciate that your trying to help the OP, but you should only offer advice if your sure about what your saying.

zora

apologies all was merely using some examples.

so maybe i did use a bad example, but ppr relief will only be affected if part of the home is used "exclusively for trade/business" purposes, i.e. if you sit at your kitchen table for a few hrs a week your relief will not be affected.(unless you specifically set up an office in your home in a room and this room would be used for no other purpose other than this business - i was fairly confident this was not the case) And before jumping on it although maybe not benefical claiming a realistic percentage although maybe not very practical say 5% light and heat for this business would be allowable.....


"making nice amount of money and hoping more will come of it" - assume more than 3k

having a seperate business bank from your persoanl account IS a requirement

point to note - first year in business you don't need to submit a tax return, so do the above and see how things are going. Again Wrong -

was merely referring to the fact that a return did NOT have to be filed in yr 1 probably should have clarified. BUT yes, does in the following year.

apologies if I wasn't clear enough

mambo

zora wrote: »

3 open a seperate bank account and lodge the income from this nixer in there - a business needs its own bank account, failure to comply can incur fines

I've read that it can be more convenient to keep separate bank accounts, but never that it was compulsory. I can't find anything about this on revenue.ie.

Mr. Incognito

God- people like to overcomplicate things.

Look, there's a section on the Form 12 for other income.

You can slap it in there. If the nixer turns into a job then you can register as self employed etc.

Mr Clonfadda

Hate to kick you while your down girlbiker but you may also have to pay prsi and our lovely new levy on all your income

bethm

girlbiker wrote: »

I have no idea about business matters so a little help would be appreciated. I work full time but have recently started freelance writing for different magazines/companies as a nixer. I'm making a nice amount of money and hopefully even more will come of it. What I need to know is what are the tax implications? Do I have to declare this income? I have to produce invoices on completion of the job for the companies but really I'm only using a template for this.
Any advice or expertise on this would be helpful!

Is there an amount you can earn on the side before having to pay tax?

As part of your income is now not earned under paye you must complete and file a self assessment return before the 31st of October 2009. Receipts should be kept as they can be offset against your earnings (nixer). This form is quite long, I sent mine to a company called 'Take Back Tax Ltd' and they did everything for me.

K09

Hi,

I am a little confused at what I need to do regarding tax on a second income. I did a one off job for 1k.

Do I have to declare this?

If so what exactly do I need to do?

Thanks for your help!!!

Mr Clonfadda

Hi K09

Yes you do need to declare it.
You would need to complete a form 12 by end of October for the previous year i.e. Form 12 for 2009 had to be completed and submitted by last Sunday.

K09

Mr Clonfadda wrote: »

Hi K09

Yes you do need to declare it.
You would need to complete a form 12 by end of October for the previous year i.e. Form 12 for 2009 had to be completed and submitted by last Sunday.

Thanks. I have just started the work now. So do I fill this form out next October (2011) for work done this year?

Also what percentage of tax am I liable to?

Mr Clonfadda

You will be liable to pay tax at 20% unless you hit your cut-off point then it will be 41%

Also please remember it will be the profit on the job that's taxable i.e. 1000 euro less justifiable expenses not necessarily the full revenue

K09

Mr Clonfadda wrote: »

You will be liable to pay tax at 20% unless you hit your cut-off point then it will be 41%

Also please remember it will be the profit on the job that's taxable i.e. 1000 euro less justifiable expenses not necessarily the full revenue

Do I have to pay VAT? Or do I register a business?

Sorry for all the questions!!

HeinekenTicket

"4 start to keep receipts for everything, not all expenses may qualify but leave that to the experts to decide. i.e. if working from home a certain amount of say electricity/phone bills may qualify for expenses and can be deducted from the income. - there will be CGT implications if you apportion home bills so this will probably not be worthwhile."


Is it not the case that there may be CGT implications only if the OP is the homeowner? What's the problem claiming home expenses if she's a tenant?

Mr Clonfadda

K09 wrote: »

Do I have to pay VAT? Or do I register a business?

Sorry for all the questions!!

If you don't register for vat you do not charge vat but you do not claim back any vat either.

if you are trading as something other than your name then you would have to register a business name, for a 1000 Euro business, providing you submit an Income Tax Return, that should be sufficient.

dbran

HeinekenTicket wrote: »

"4 start to keep receipts for everything, not all expenses may qualify but leave that to the experts to decide. i.e. if working from home a certain amount of say electricity/phone bills may qualify for expenses and can be deducted from the income. - there will be CGT implications if you apportion home bills so this will probably not be worthwhile."


Is it not the case that there may be CGT implications only if the OP is the homeowner? What's the problem claiming home expenses if she's a tenant?

There is no problem at all claiming a proportion of the home expenses that have been wholly and necessarily incurred in the course of business such as the extra light and heat, telephone calls, internet etc. This will NOT affect your PPR relief by themselves.

The problem will arise if you try to claim part of the mortgage interest as a business expense. This will effectively mean that you are dividing off a proportion of the house exclusively for business use and this means that that portion of the house will not be eligible for PPR relief for that time period that the business resides there. So simple answer is don't claim the mortgage interest.

If you are renting then you can claim a portion of the rent.

Kind Regards


dbran