Quick query on employee PRSI - a bit confused.

another question

I saw a job advertised for €9.35 p/h - 39 hour week.

On Citizens Information it says that employees earning €352 or less per week BEFORE tax deductions are exempt for PRSI.

The above job works out at €364.65 p/w (€12.00 over the PRSI threshold). It says that if you are earning over €352 then you must pay PRSI on ALL your earnings.

Is this correct?

It seems really unfair that because its €12 over p/w the employee has to pay €760 annually for PRSI.

Is there no middle ground or am I missing something>

Citizenpain

One of the animolies of our tax system unfortunately

namenotavailablE

Is this possible:

In order to minimise the effects of this you agree to earning €352 pw for 51 weeks and then making up the difference with a Christmas bonus (bonus = 52 weeks x €12.65)?
You'd pay zero employee PRSI on the 51 weeks and then pay a large sum on week 52. However, if the PRSI for week 52 is less than it otherwise would be you'd come out ahead.
Not totally sure myself if this is still possible- I've a feeling it isn't but don't know?

Mr. Incognito

namenotavailabl wrote: »

Is this possible:

In order to minimise the effects of this you agree to earning €352 pw for 51 weeks and then making up the difference with a Christmas bonus (bonus = 52 weeks x €12.65)?
You'd pay zero employee PRSI on the 51 weeks and then pay a large sum on week 52. However, if the PRSI for week 52 is less than it otherwise would be you'd come out ahead.
Not totally sure myself if this is still possible- I've a feeling it isn't but don't know?

The bonus would probably kick you into 41 percent territory paye for that week so.... You'd lose more. Haven't bothered doing the math but I reckon you'd suffer more tax that way

namenotavailablE

The bonus would probably kick you into 41 percent territory paye for that week so.... You'd lose more. Haven't bothered doing the math but I reckon you'd suffer more tax that way

41% tax won't be an issue on an annual income equivalent to a shade under €19000 gross- undoubtedly, you'd certainly be paying more tax in week 52, however, but that extra tax wouldn't come close to the potential saving on PRSI (if this proposal is in fact valid).

By my calculations (and I'm open to correction), the €352 pw + large Xmas bonus nets you €17783 pa [tax €492, PRSI/USC €687 (of which €40.87 is PRSI)] whereas the €364.65 pw nets you €17065 [tax €492, PRSI/USC €1405, of which €758 is PRSI].

srsly78

ahem *www.taxsaver.ie*

Sacrifice some salary towards bus/train ticket... Alternatively get employer to buy you a bike.

Also, possibly sacrifice e250 salary in lieu of a gift voucher from employer. http://www.revenue.ie/en/business/paye/guide/employers-guide-paye-definition.html (small benefits allowable)

Another link from revenue faq: http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/faqs/miscellaneous.html#misc15

If it's just a small salary reduction you need, then it should be possible to come to an agreement with your employer using the various small benefits detailed above. It benefits your employer slightly as well, as employers prsi will be reduced - but does involve some paperwork and filling out of forms.