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Tax on second job

  • 16-05-2009 8:47pm
    #1
    Faith
    Moderators, Society & Culture Moderators Posts: 30,661 Mod ✭✭✭✭


    Someone told me earlier that if you have two jobs (both part-time, say) that you have to pay the higher tax on the income from the second job, even if you don't earn more than the threshold for the higher tax bracket. Is this true?


Comments

  • #2
    Thoie
    Registered Users, Registered Users 2 Posts: 6,344 ✭✭✭Thoie


    No, only if it pushes you over the thresholds.

    What might happen is that your "primary" job will apply all the tax credits, in which case there are none left to apply to the second job, and you'll be charged full whack (not necessarily the higher tax band) for the second job.


  • #3
    Faith
    Moderators, Society & Culture Moderators Posts: 30,661 Mod ✭✭✭✭Faith


    Thoie wrote: »
    No, only if it pushes you over the thresholds.

    What might happen is that your "primary" job will apply all the tax credits, in which case there are none left to apply to the second job, and you'll be charged full whack (not necessarily the higher tax band) for the second job.

    Cheers, that's what I thought.


  • #4
    Thoie
    Registered Users, Registered Users 2 Posts: 6,344 ✭✭✭Thoie


    Section 5.2 might help:

    http://www.revenue.ie/en/tax/it/leaflets/it11.html#section5


    Let's say the threshold for the higher tax band is 30k, and you have tax credits of 2k. For simplicity, we'll call the tax bands 20% and 40%

    If you have two jobs, each paying 10k, then both are at the 20% rate.
    So, you owe 2k in tax for each one. Your tax credits wipe out the tax debt for the first job, giving you the full 10k there, and for the second job you'll receive 8k. Total into your hand is 18k for the year.

    Now let's say both jobs pay 20k. You now owe 10k total in taxes.
    In your first job you'll owe 4k - the 2k credits = 2k. So for the first job you'll get 18k into your hand. But, now the second job has no credits to use AND pushes you into the higher bracket. So you've "paid" 4 of the 10 from the first job, but now have to pay the remaining 6k in taxes from the second job - meaning the second job only gives you 14k into your hand. BUT if the second employer doesn't know about the first, they may mistakenly put you on emergency tax, which might be higher than you'd have to pay, but could also be less than you have to pay - in which case you'd get a nasty shock at the end of the year when both companies send in the annual returns, and the Revenue realises you've underpaid.

    You can arrange things with the employers to split the payment, so that both jobs pay you 16k.


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