Delaying Claming Job Seekers Benefit - PAYE Tax Credit

fafy

I had this in "State Benefits" but, it was suggested to have it in the tax forum.
http://www.boards.ie/vbulletin/showthread.php?p=89235036#post89235036


Does anyone know if it is possible to delay, claiming Job Seekers Benefit, and the effectof this, if any.

Its a redundancy situation for an employee(partner working, taxed jointly), ceasing employment at the end of June, the employee does not expect to be working going forward, and may have to retrain. Once the unemployment benefit ceases after 9 months, they will not get further payments(no Unemployment assistance) as a result of their partners earnings, will mean they will not pass the means test.

The case I am looking at has an employee who tells me that if they delay claiming job seekers benefit until January 2015 they will be better off. But I am unsure if this is possible, to delay claiming for 6 months.

They say if they wait until 2015, they will receive almost the full PAYE tax credit of 1,650, whereas if they start claiming in June 2014, but by the time the 9 months of the payment have concluded,(March 2015) they will only be able to claim the amount paid in Job Seekers Benefit in 2015.

e.g. Claim Unemployment Benefit from July 1st 2014, that will leave 3 months to be paid in 2015, or 13 weeks at 175(188-first 13 non taxable) = 2,275, this will equate to a PAYE allowance on 2015 of only 455, therefore the individual is loosing out by 1,195.

Anyone any thoughts ?

Mr. Incognito

This is a basic misunderstanding of what the PAYE credit is

It is a PAYE CREDIT against PAYE PAID.

No paye employment income to be taxed nothing to credit against. In other words,

Nothing.

You can of course delay applying for social welfare. If you do you will get nothing for the period of delay as it is only backdated to the date of application.

So, if you delay........you get nothing.

If you don't delay you get social welfare from the date of application.

Also the credit is apportioned. If you have PAYE income you get the full credit. The fact it is apportioned to your working months is immaterial. They will get the full credit for 2014

wmpdd3

Op do you intend benefiting by your partner taking the full tax credit?

Would they earn enough for this benefit to out weigh the fact you would not be getting a payment.

That sounds plausable to me.

If you are going to retrain you should look into btea.

fafy

Mr. Incognito wrote: »

This is a basic misunderstanding of what the PAYE credit is

It is a PAYE CREDIT against PAYE PAID.

No paye employment income to be taxed nothing to credit against. In other words,

Nothing.

You can of course delay applying for social welfare. If you do you will get nothing for the period of delay as it is only backdated to the date of application.

So, if you delay........you get nothing.

If you don't delay you get social welfare from the date of application.

Also the credit is apportioned. If you have PAYE income you get the full credit. The fact it is apportioned to your working months is immaterial. They will get the full credit for 2014

My understanding is that you get the PAYE tax credit when you have PAYE income, which includes: income from an employment, social welfare payments etc. It is not given specifically to an "employment" but to all income which falls into the PAYE net, which includes employment income, and taxable social welfare payments, such as illness benefit, job seekers benefit etc.

I looked up the revenue website to double check and they confirm that this is the case:
http://www.revenue.ie/en/tax/it/credits/paye-employee-credit.html

It's a very valuable tax credit at 1,650 per year, so if in this case, if delaying claiming unemployment benefit until January 2015 was possible, then the individual would get 39 payments of 188-13 non taxable) = 175 x 39 = 6,825(for PAYE purposes), and they would get the PAYE tax credit, and the full tax liability of the social welfare payment would be covered by the credit.

What I don't know for sure, if an individual delays, claiming unemployment benefit until 2015, will they still get nine months payments from that date ?

Re- taking credit to benefit partner: No, the PAYE tax credit would cover the tax liability on the individuals unemployment benefit payments which is taxable at their marginal rate which is 20%. The PAYE tax credit is non transferrable as far as I am aware. The individual can also allocate their personal and other tax credits to their partner, as well as transferring the maximum allowed, of standard rate cut off.

& thanks, will look into Back To Education Allowance also.

Mr. Incognito

fafy wrote: »

My understanding is that you get the PAYE tax credit when you have PAYE income, which includes: income from an employment, social welfare payments etc. It is not given specifically to an "employment" but to all income which falls into the PAYE net, which includes employment income, and taxable social welfare payments, such as illness benefit, job seekers benefit etc.

I looked up the revenue website to double check and they confirm that this is the case:
http://www.revenue.ie/en/tax/it/credits/paye-employee-credit.html

It's a very valuable tax credit at 1,650 per year, so if in this case, if delaying claiming unemployment benefit until January 2015 was possible, then the individual would get 39 payments of 188-13 non taxable) = 175 x 39 = 6,825(for PAYE purposes), and they would get the PAYE tax credit, and the full tax liability of the social welfare payment would be covered by the credit.

What I don't know for sure, if an individual delays, claiming unemployment benefit until 2015, will they still get nine months payments from that date ?

Re- taking credit to benefit partner: No, the PAYE tax credit would cover the tax liability on the individuals unemployment benefit payments which is taxable at their marginal rate which is 20%. The PAYE tax credit is non transferrable as far as I am aware. The individual can also allocate their personal and other tax credits to their partner, as well as transferring the maximum allowed, of standard rate cut off.

& thanks, will look into Back To Education Allowance also.

Okay,

I understand where you are coming from now.

Question 1. Can you defer the payment application.
No. If you defer applying for social welfare etc then you lose it. If you apply in Jan 2015 your payment will only apply from Jan 2015 and you will lose the lot in relation to 2014.

Question 2.
Does the PAYE Credit apply to Social Welfare payments.
Not really. In a situation where one person is on social welfare solely the State has no mechanism to collect PAYE and in practice doesn't do so. Social Welfare payments are made free of tax and they don't chase it.
In a situation where there is a mix of paid employment and social welfare they will balance they may overall tax due, (or if you request a P21) and tax the social welfare income.

Question 3.
Would you save anything by "deferring" your social welfare until next year.
No.

fafy

Mr. Incognito wrote: »

Okay,

I understand where you are coming from now.

Question 1. Can you defer the payment application.
No. If you defer applying for social welfare etc then you lose it. If you apply in Jan 2015 your payment will only apply from Jan 2015 and you will lose the lot in relation to 2014.

Question 2.
Does the PAYE Credit apply to Social Welfare payments.
Not really. In a situation where one person is on social welfare solely the State has no mechanism to collect PAYE and in practice doesn't do so. Social Welfare payments are made free of tax and they don't chase it.
In a situation where there is a mix of paid employment and social welfare they will balance they may overall tax due, (or if you request a P21) and tax the social welfare income.

Question 3.
Would you save anything by "deferring" your social welfare until next year.
No.

Thank you, thats the answer I did not know, so you cannot delay claiming unemployment benefit, claim it right away, or loose it. But, i am wondering would this only apply, to job seekers allowance ? As this is an ongoing payment, with no 9 month limit, like Job Seekers Benefit.

In the details of the case I am looking at, the individual will only get job seekers benefit for 9 months, end of,
as their partners earnings will mean, they will not quaulify for job seekers allwance, due to the means test that applies to job seekers allowance.

The PAYE credit has major application to Social Welfare Payemnts in a jointly assessed tax situation, where one partner is working.(not so however if they are taxed seperately)
Where the PAYE tax credit comes into play, is that when the couple is jointly assessed, tax arises on the unemployment benefit @ 20%, if this is say 1,200 Euro, then the unemployed individuals PAYE credit can be used against that, but if the unemployed individual were not to get the PAYE credit, the couple jointly assessed would owe this money, and have a tax bill at the end of the year.

Mr. Incognito

fafy wrote: »

Thank you, thats the answer I did not know, so you cannot delay claiming unemployment benefit, claim it right away, or loose it. But, i am wondering would this only apply, to job seekers allowance ? As this is an ongoing payment, with no 9 month limit, like Job Seekers Benefit.

In the details of the case I am looking at, the individual will only get job seekers benefit for 9 months, end of,
as their partners earnings will mean, they will not quaulify for job seekers allwance, due to the means test that applies to job seekers allowance.

The PAYE credit has major application to Social Welfare Payemnts in a jointly assessed tax situation, where one partner is working.(not so however if they are taxed seperately)
Where the PAYE tax credit comes into play, is that when the couple is jointly assessed, tax arises on the unemployment benefit @ 20%, if this is say 1,200 Euro, then the unemployed individuals PAYE credit can be used against that, but if the unemployed individual were not to get the PAYE credit, the couple jointly assessed would owe this money, and have a tax bill at the end of the year.

that's pretty much the system. If you are jointly assessed it can drag the earning partner down.

Social welfare is emergency funds to help people in a stop gap situation. Where one has a partner that is working and doesn't qualify I am at pains to see why they would qualify this year given that they are in the same circumstances.

Your jobseekers benefit and allowance are different because in one you have contributed enough to PRSI to be given the benefit of the doubt and in the other, which is stricter you are not.

"Deferring" tax funded emergency money to get more or "game" the system is someone imo who shouldn't qualify for it in the first place.

Social welfare agree with me and as a result you cannot backdate it before the application.

fafy

Mr. Incognito wrote: »

that's pretty much the system. If you are jointly assessed it can drag the earning partner down.

Social welfare is emergency funds to help people in a stop gap situation. Where one has a partner that is working and doesn't qualify I am at pains to see why they would qualify this year given that they are in the same circumstances.

Your jobseekers benefit and allowance are different because in one you have contributed enough to PRSI to be given the benefit of the doubt and in the other, which is stricter you are not.

"Deferring" tax funded emergency money to get more or "game" the system is someone imo who shouldn't qualify for it in the first place.

Social welfare agree with me and as a result you cannot backdate it before the application.

Fair points, and youre right, one cannot expect the system to bend to ones own "specific" advantage.
It was a question that was was asked of me, and I wanted to check out the facts thoroughly for them, thank you.