Income tax refund on unemployment

5.11 Tactical

Can anyone answer this for me as it is not clear from the revenue site.

When I apply for a refund of income tax, do I get a partial refund of income tax or do I get a refund of tax credits ?

I have paid €12,900 in tax & USC up to July and been on the dole since mid-july.

So not to sure what I am entitled to, my local tax office is very vague with any explanation

srsly78

At the end of the year you will get a refund if one is due.

5.11 Tactical

You get a refund within 2 weeks my question is off what ? tax paid or tax credits unused

srsly78

How would you get one in 2 weeks? Would be at the end of the year - there is no way to predict if you will stay unemployed.

It would be a refund of any tax you overpaid. This is derived from tax credits unused - however if you didn't pay any tax then there would be no refund. Also note that tax credits only applies to income tax, not to USC or prsi - these work by bands instead.

Just apply for a balancing statement at year end, all will be computed and a refund issued if due.

5.11 Tactical

Okay to explain this in laymans terms.

If you are unemployed for a period of time, you apply to the revenue with a P50 and P45 and you get a tax refund (Partial) for the year in which you paid tax.

This is processed depending on the time your out of work, tax paid and remaining credits.

It takes from 3 days to 2 week to get a refund.

It is not at the end of the year and this is off topic, my question is to anyone with previous knowledge what is refund your tax paid or unused tax credits.

srsly78

You would get a tiny refund if you apply now, to get the full amount you apply at the end of the year.

Unused tax credits do NOT get refunded - that's not how they work. Only overpaid tax gets refunded.

Simple example:
Person pays 0 tax, and has 4000 unused tax credits -> refund due = ZERO
Person pays 2000 tax, and has 2000 unused tax credits -> refund due = 2000

mirrorwall14

Tax paid.

Tax credit is a reduction on your tax bill

2ndcoming

The answer is a bit of both. You get a refund based on the difference between the tax you paid by the end of the employment and the amount you would have paid at today's date if it had taken that long to earn said income.

E.g.

Annual tax credit 3300

Final pay at month 7 15,000
Tax credit at month 7 1925 (3300 / 12 x 7)
Tax paid 1075 (15000 @ 20% - 1925 credit)

Income to date at Month 9 15,000
Tax credit at month 9 2475 (3300 / 12 x 9)
Tax due at month 9 525 (15000 @ 20% - 2475 credit)
Refund 550 (1075 - 525)

USC generates a bit of an extra refund to this. This is the most basic breakdown of how a P50 works. When you've paid at the higher rate the calculation becomes trickier.

5.11 Tactical

Thanks for that :-)

Mr. Incognito

Dole is taxable income so you may end up owing extra tax

5.11 Tactical

Yes around €13 or so of it is taxable.

2ndcoming

Well no, it's either all of it or none of it: all of it is taxable if it's Jobseeker's Benefit, none if it's Jobseeker's Allowance.

barneystinson

2ndcoming wrote: »

Well no, it's either all of it or none of it: all of it is taxable if it's Jobseeker's Benefit, none if it's Jobseeker's Allowance.

The first €13 of JSB, and any increase for child dependants, is exempt. The remainder of c.€175 is taxable.

JSA is not taxable.

http://www.revenue.ie/en/tax/it/leaflets/it24.html

2ndcoming

barneystinson wrote: »

The first €13 of JSB, and any increase for child dependants, is exempt. The remainder of c.€175 is taxable.

JSA is not taxable.

http://www.revenue.ie/en/tax/it/leaflets/it24.html

Cool. Didn't know about the €13 exempt. Still, OP thought everything but €13 was exempt, didn't want him to get a shock.