Reclaiming USC

A_Sober_Paddy

Hey all,

Just chatting to my mate, he got his P60 today and i says he didn't pay any USC last year, and i asked him about it, and he said his not paid any for the past 2 years.

I asked him if he'd had a medical card, to which he did, but it ran out half way though last year, but would that not mean he'd still be liable for USC for 6 months?

Can the tax man, come looking to take the USC off him retrospectively?

I may have put him in a little bit of a panic...

CIARAN_BOYLE

A_Sober_Paddy wrote: »

Hey all,

Just chatting to my mate, he got his P60 today and i says he didn't pay any USC last year, and i asked him about it, and he said his not paid any for the past 2 years.

I asked him if he'd had a medical card, to which he did, but it ran out half way though last year, but would that not mean he'd still be liable for USC for 6 months?

Can the tax man, come looking to take the USC off him retrospectively?

I may have put him in a little bit of a panic...

Med card doesnt make you usc exempt you still pay usc.

Only usc exemption I can think of is if he earns less than 10036 in a yeR

toadfly

He would still have to pay it but the rate is capped at 4%. He is exempt if earning under €12012.

A_Sober_Paddy

toadfly wrote: »

He would still have to pay it but the rate is capped at 4%. He is exempt if earning under €12012.

26k he earned last year

Paid 1950 Income tax
Paid 1050 PRSI
Employer Paid 2820 PRSI

Numbers roughly rounded

Yawns

He'd be subject to a capped rate of USC for the time holding a medical card. 2% on the first 10k and then 4% on anything over it.

He won't pay USC last year for total amounts earned under 10k or social welfare payments.

For this year the amount is 0% if total earned is under 12k or Welfare payments.

1.5% on the first 12k

3.5% on anything over.

Medical card holders earning 60k or less are on a reduced rate

A_Sober_Paddy

Yawns wrote: »

He'd be subject to a capped rate of USC for the time holding a medical card. 2% on the first 10k and then 4% on anything over it.

but his paid none, and all the tax his paid is in my previous post, his just worried in case the tax man comes looking for it, as he doesn't have it and he can't understand why/how his company have made such a cock up

hfallada

Someone on this recently said they had a medical card expire in January and were still exempt from USC for the year. Anyway your friend should call revenue and check, as he will have to pay for any misunderstanding that have resulted in tax being underpaid

A_Sober_Paddy

hfallada wrote: »

Someone on this recently said they had a medical card expire in January and were still exempt from USC for the year. Anyway your friend should call revenue and check, as he will have to pay for any misunderstanding that have resulted in tax being underpaid

He wants to know what are the odds of them not noticing? And or is there a time limit in which they can claim back the USC charge?

Yawns

Dunno about time limit but possibly because he had a medical card for a portion of the year, he was exempt for the full year. Has he paid USC this year at all yet?

A_Sober_Paddy

Yawns wrote: »

Dunno about time limit but possibly because he had a medical card for a portion of the year, he was exempt for the full year. Has he paid USC this year at all yet?

He said no USC this year, but gets paid every 4 weeks if that has a affect?

Yawns

Afaik it's supposed to be spread out over the year which might explain why he would be exempt last year as he held a medical card, if his tax credits are up to date, then it's possible he could be paying USC from his next wages onwards. Did his last payslip cover any part of December at all?

Rather than kicking the can down the road and hoping for the best, I'd recommend him ringing Revenue and finding out his actual position in relation to it. If it is an oversight, you can bet your ass they will rectify it sooner rather than later.

A_Sober_Paddy

Yawns wrote: »

Afaik it's supposed to be spread out over the year which might explain why he would be exempt last year as he held a medical card, if his tax credits are up to date, then it's possible he could be paying USC from his next wages onwards. Did his last payslip cover any part of December at all?

Rather than kicking the can down the road and hoping for the best, I'd recommend him ringing Revenue and finding out his actual position in relation to it. If it is an oversight, you can bet your ass they will rectify it sooner rather than later.

Would a p21 balancing statement sort it out actually?

relax carry on

A_Sober_Paddy wrote: »

Would a p21 balancing statement sort it out actually?

Requesting a P21 will show up the USC underpayment.

Yawns

Well that was what I was initially thinking would probably be the best way as a tax credit certificate would be updated and issued to both your friend and his employer. From a quick read of the USC FAQ, it seems to be responsibility of the employer, read payroll, to ensure it's applied correctly. Assuming your friend will inevitably be dealing with revenue at some stage in the future, it would probably be wise to try sort it now so that if any taxes are owed, it can be sorted while it's a relatively low amount.

I think a P21 balancing statement would sort it and he can do it via the online portal too as long as he's registered. If he's only liable for USC for 2015, then he won't have any back tax to pay as it will just get calculated for the rest of the year and be spread out evenly. As far as I can tell anyway.

Yawns

relax carry on wrote: »

Requesting a P21 will show up the USC underpayment.

But if he's only liable for 2015, then it will balance out throughout the year. This is how you don't overpay USC as well.

Yawns

I'd more more concerned at this stage if he was liable for 6 months of last year or whenever his medical card expired.

thesimpsons

While it is the responsibility of employer to apply usc and other tax rates correctly, employer must work on the info as supplied to them by Revenue. So, if revenue mistakenly puts someone on an incorrect rate due to either a straightfard error or cos they got wrong information from employee in the first place, employer still must act on those rates. Best thing to do is request P21 and hope everything is correct. If money is due - revenue can come looking for it for years afterwards.

A_Sober_Paddy

thesimpsons wrote: »

While it is the responsibility of employer to apply usc and other tax rates correctly, employer must work on the info as supplied to them by Revenue. So, if revenue mistakenly puts someone on an incorrect rate due to either a straightfard error or cos they got wrong information from employee in the first place, employer still must act on those rates. Best thing to do is request P21 and hope everything is correct. If money is due - revenue can come looking for it for years afterwards.

We've just been looking through his p60's and p21's and he paid USCin 2013, but none in 2014, nothing changed in those years. He had a full Medical card both years, but worked more in 2014?

Well for 6 months in 2014 he had a medical card...

relax carry on

Yawns wrote: »

But if he's only liable for 2015, then it will balance out throughout the year. This is how you don't overpay USC as well.

The P21 will relate to the tax year 2014, January to December. If he underpaid Usc in that period, the P21 will show that. The underpayment may be collected by reducing his tax credits for 2015, thereby covering the Usc liability.

Kristopherus

A_Sober_Paddy wrote: »

We've just been looking through his p60's and p21's and he paid USCin 2013, but none in 2014, nothing changed in those years. He had a full Medical card both years, but worked more in 2014?

Well for 6 months in 2014 he had a medical card...

Did he work in 2010, 11, & 12.? Is his other half working?

A_Sober_Paddy

Kristopherus wrote: »

Did he work in 2010, 11, & 12.? Is his other half working?

unemployed 2010,2011 and worked half of 2012, his single, he lives with me(his my roommate)

Kristopherus

A_Sober_Paddy wrote: »

unemployed 2010,2011 and worked half of 2012, his single, he lives with me(his my roommate)

Right. I'm presuming that he got a medical card when he was unemployed. If so, he is entitled to retain the card for a period of 3 years after taking up employment. This retention clause was introduced in 1996 and was designed to help people get back on their feet after a period of unemployment.AFAIK that clause has never been cancelled. In fact it is more relevant now. Your mate should ring the Med Card Office and check this out.

toadfly

thesimpsons wrote: »

While it is the responsibility of employer to apply usc and other tax rates correctly, employer must work on the info as supplied to them by Revenue. So, if revenue mistakenly puts someone on an incorrect rate due to either a straightfard error or cos they got wrong information from employee in the first place, employer still must act on those rates. Best thing to do is request P21 and hope everything is correct. If money is due - revenue can come looking for it for years afterwards.

I work in Payroll and we had a case last year that when the P2C (tax info) came from revenue for an employee he was marked as USC exempt in error. It was eventually spotted and he had to repay the taxes owed. It's actually the employees responsibility to pay the tax so they must ensure they are paying the correct taxes on their own wages. Obviously the employer has no way of knowing if the information coming from revenue is correct.

On our old payroll software there was a box that could be ticked manually to exempt someone from USC so it could be a human error from your employer. Ring your payroll dept, ask them to check the P2C they received for January 2014, they will be able to see what details came from revenue.

thesimpsons

A_Sober_Paddy wrote: »

We've just been looking through his p60's and p21's and he paid USCin 2013, but none in 2014, nothing changed in those years. He had a full Medical card both years, but worked more in 2014?

Well for 6 months in 2014 he had a medical card...

did his employer know he had a medical card in 2013 ? best to do P21 balancing statements for all 3 years.

I always advise everyone to do balancing statements every year as most people don't know the correct rates they should be paying and any errors or shortfalls (or refunds) can be quickly processed on an annual basis rather than leaving them build up.

Kristopherus

Kristopherus wrote: »

Right. I'm presuming that he got a medical card when he was unemployed. If so, he is entitled to retain the card for a period of 3 years after taking up employment. This retention clause was introduced in 1996 and was designed to help people get back on their feet after a period of unemployment.AFAIK that clause has never been cancelled. In fact it is more relevant now. Your mate should ring the Med Card Office and check this out.

As an addition to the above post, here is an excerpt from the HSE website that clarifies how long you can retain your card.

"Can I retain my card if I return to work?

The retention of Medical Cards (without a means test) is approved for people as indicated below:-

People who participate on certain Government Employment and Education Schemes will retain their entitlement to a Medical Card for the duration of the scheme (Examples include Back to Work Allowance, Community Employment Schemes, Back to Education Allowance, etc.)

People who have been unemployed or in receipt of One Parent Family Payment for a minimum of 12 months will retain their Medical Card for a period of 3 years if they commence employment
When a person who has been unemployed for a period of 12 months or more enters part-time employment, their medical card will be retained for a period of 3 years from the date their income increases to a level which exceeds the appropriate Medical Card Guideline.

People who hold a medical card and are in receipt of a Disability Allowance or a Blind Pension from the Department of Social and Family Affairs and who take up employment are allowed to retain their Medical Card for a maximum of 3 years from the date of taking up employment. Dependent members of the family of those covered
by the 'retention' provisions will also be granted medical cards."


http://www.hse.ie/eng/services/list/1/schemes/mc/about/questionsandanswers/