Bonus Tax

Saruman

Why is bonus tax so ridiculous? My wife just got a bonus of €2808 and of that she got €1207.
I'm not even sure how it's possible to be taxed nearly 60% and this happens every year.

Redsox Rover

Hi Op,

Your wife must enter the higher rate of tax with her salary and therefore her bonus is charged at the higher rate of tax, Universal social charge and then she alsy pays PRSI on this. This will in turn mean she pays 58% on her bonus.

Saruman

Ah ok grand. Nice and simple then.
Thanks for that.

CIARAN_BOYLE

Redsox Rover wrote: »

Hi Op,

Your wife must enter the higher rate of tax with her salary and therefore her bonus is charged at the higher rate of tax, Universal social charge and then she alsy pays PRSI on this. This will in turn mean she pays 58% on her bonus.

I'm not sure how you are getting 58%, by my calculations its 52% max.


41% higher rate
7% usc
4% PRSI

JustAddWater

Saruman wrote: »

Why is bonus tax so ridiculous? My wife just got a bonus of €2808 and of that she got €1207.
I'm not even sure how it's possible to be taxed nearly 60% and this happens every year.

It's a shamble. Very little incentive, even I found a bonus or overtime would leave me worse off in some cases. Worse off for working extra hard? Absolutely crazy country... But if it was changed I guess it'd be rife with abuse

richardbradley

As a higher rate tax payer receiving a "bonus" ie money not needed to live off, she could put it into a pension and avoid the tax. All the pros and cons of pensions obviously apply.

Mr. Incognito

Ask for a P21 Balancing statement to issue for the last few years as it is likely she may be possible to a refund if one payment kicks here into a higher tax bracket

Saruman

We always do that and usually do get money back.