Medical Insurance impact on payroll

fruitcake1 · 30-09-2011 1:34pm #1

Hi, can anyone help me on this income tax issue.

I will describe my question in a simple example help to make it easier to understand.

Say my salary is 1000 euros, my employer pays my medical insurance premium as benefit say its 100 euros charge to monthly payroll. I understand i have to pay tax on the 100 euros medical insurance cost as BIK, so my monthly taxable income is 1000+100=1100, i pay tax, PRSI, Levy on this 1100. Say total tax caculated after deducting tax credit for this 1100 is 150 euros, my question is what is my net pay.

Is it 1100-150=950? or it's 1000-150=850?

Which means, is the total tax deducted from the total taxable income or from the salary only?

Thanks

namenotavailablE · 30-09-2011 2:11pm

It would actually be €1100-€150-€100=€850.

You would need to deduct the €100 benefit-in-kind (which you weren't doing in the example you gave) as it's not actually paid to you- it's a 'non-cash benefit'.

dbran · 30-09-2011 3:16pm

Hi

You are also entitled to a tax credit of 20% of the gross premium paid by your employer to the medical insurance. So assuming that the €100 in your example includes the 20% tax credit which is granted at source, you are entitled to an extra 100 x20% ie €20 tax credit.

Regards

dbran

fruitcake1 · 30-09-2011 9:01pm

em...ok...so effectively, my net pay is 850 regardless its 1000-150 or 1000+100-150??

Dbran - sorry, i didn't really get your point, i think included in my tax credit are paye+single person+Health insur.*20% credit, do i entitle additional tax credit?

Thanks both of you for your relpy

allthedoyles · 30-09-2011 9:13pm

You get no extra tax credits .

You already have a tax credit for health insurance and your employer pays it for you , so as said above , there is no cash benefit from this .

But ensure that the annual amount of your health insurance premium is exactly the same as the annual amount of your health insurance tax credit

fruitcake1 · 01-10-2011 11:05am

allthedoyles wrote: »

You get no extra tax credits .
You already have a tax credit for health insurance and your employer pays it for you , so as said above , there is no cash benefit from this .

But ensure that the annual amount of your health insurance premium is exactly the same as the annual amount of your health insurance tax credit

OK, thanks you allthedolyes

Medical Insurance impact on payroll

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