Taxable JSB & Tax Credits

carolinej

Hi, I'm starting a new job next month after a 12 month period of unemployment.

I rang revenue today to get a certificate of tax credits and standard rate cut of point.

I was told JSB is taxable, which is fair enough, what I don't understand is the tax credit adjustment from €3,300 to €2,670 (estimate figure until social welfare inform revenue of value of my final benefit payment, as I understood what he me).

So, how did revenue official come to €2,670? (I'm single w/no dependents btw)

Any advice appreciated.

barneystinson

carolinej wrote: »

Hi, I'm starting a new job next month after a 12 month period of unemployment.

I rang revenue today to get a certificate of tax credits and standard rate cut of point.

I was told JSB is taxable, which is fair enough, what I don't understand is the tax credit adjustment from €3,300 to €2,670 (estimate figure until social welfare inform revenue of value of my final benefit payment, as I understood what he me).

So, how did revenue official come to €2,670? (I'm single w/no dependents btw)

Any advice appreciated.

JSB is 188 p.w., and the first 13 isn't taxable, so that's 175 pw taxable...
If you're unemployed up to the end of April that's about 18 weeks.
18 x 175 is 3,150. As it's your first 3,150 of income it's taxable at 20%, that means it uses up 630 of tax credit... which is the difference between 3,300 and 2,670.

carolinej

Thanks, I understand it clearly now:)

Buffman

Hi, I have a related question which hopefully someone can answer.

I'm in a similar situation as the OP.

I've sorted out my credits and cut off rate and recieved my amended certificate. My question relates to the monthly/weekly breakdown.

The revenue seem to have ignored the fact that we're well into the year. So, taking the yearly credits and cut off, they've divided this by 12 for monthly and 52 for weekly allocations on the certificate.

I'm wondering should the yearly figure not be divided by the months/weeks remaining in the year. So, for example using the OP's €2,670, the monthly credits are €222.5 for 12 months, but this increases to €333.75 if calculated for the 8 months remaining in the year?

Is it just a case of revenue automatically using the full year and it being up to my employer to recalculate based on the full yearly credits divided by months/weeks remaining in the current tax year?

Thanks, any help appreciated.:)

barneystinson

Buffman wrote: »

Hi, I have a related question which hopefully someone can answer.

I'm in a similar situation as the OP.

I've sorted out my credits and cut off rate and recieved my amended certificate. My question relates to the monthly/weekly breakdown.

The revenue seem to have ignored the fact that we're well into the year. So, taking the yearly credits and cut off, they've divided this by 12 for monthly and 52 for weekly allocations on the certificate.

I'm wondering should the yearly figure not be divided by the months/weeks remaining in the year. So, for example using the OP's €2,670, the monthly credits are €222.5 for 12 months, but this increases to €333.75 if calculated for the 8 months remaining in the year?

Is it just a case of revenue automatically using the full year and it being up to my employer to recalculate based on the full yearly credits divided by months/weeks remaining in the current tax year?

Thanks, any help appreciated.:)

It's broken down to weekly / monthly figures, but what you're not realising is that it is cumulative, so as you say if we are 4 months into the year and you start work, you have that 4 months of credit / cut-off point accumulated, so it could be months before your earnings catch up to the extent that you pay any tax.

This way is actually more beneficial to you than the way you were suggesting, since you have 5/12 of your credits for the year by the end of May, whereas you'd only have 1/8 of them the other way...

Buffman

Thanks, now if only that darn USC was the same!:D

barneystinson

Buffman wrote: »

Thanks, now if only that darn USC was the same!:D

It is!